EPIQ Systems Inc. (EPIQ, Financial) filed Quarterly Report for the period ended 2009-06-30.
EPIQ Systems Inc. develops markets and licenses proprietary software solutions for workflow management and data communications infrastructure that serve the bankruptcy trustee market and financial services market. EPIQ Systems Inc. has a market cap of $588 million; its shares were traded at around $16.31 with a P/E ratio of 34 and P/S ratio of 2.5. EPIQ Systems Inc. had an annual average earning growth of 36.5% over the past 10 years. GuruFocus rated EPIQ Systems Inc. the business predictability rank of 3.5-star.
Bankruptcy direct and administrative expenses increased $7.6 million, or 104%, to $14.8 million for the three months ended June 30, 2009, compared to $7.2 million in prior year. The increase is primarily attributable to a $2.5 million increase in compensation related expense, due primarily to expanded staffing in support of new client engagements; a $1.5 million increase in outside services expense; a $2.3 million increase in reimbursed direct costs, which directly corresponds to the increase in operating revenue from reimbursed direct costs; a $0.4 million increase in noticing expense; and a $0.6 million increase in call center services.
Operating Expense The direct cost of services, exclusive of depreciation and amortization, was $39.4 million for the six months ended June 30, 2009, a decrease of $3.9 million, or 9%, as compared to $43.3 million in the prior year. Contributing to this decrease was a $5.1 million decrease in legal noticing costs and a $3.1 million decrease in the cost of outside services, primarily related to temporary help and mailing in the prior year period. These decreases were partially offset by an increase of $2.3 million in compensation related expense; a $1.0 million increase in production supplies; a $0.6 million increase in software maintenance costs; a $0.3 million increase in equipment expense; and a $0.2 million increase in insurance expense.
Electronic discovery direct and administrative expenses increased $3.9 million, or 26%, to $19.1 million for the six months ended June 30, 2009, compared with $15.2 million in the prior year. This increase is primarily a result of a $2.3 million increase in compensation, commission and benefits expense, and $0.2 million increase in travel and entertainment expense, resulting from the expansion of services and geographic expansion of our business; a $0.5 million increase in the outside services; a $0.5 million increase in software maintenance costs; and a $0.3 million increase in building and equipment lease expense, primarily related to data center expansion.
Bankruptcy direct and administrative expenses increased $11.1 million, or 78%, to $25.2 million for the six months ended June 30, 2009, compared to $14.1 million in prior year. The increase is primarily attributable to a $3.5 million increase in compensation related expense, due to expanded staffing in support of new client engagements; a $2.5 million increase in outside services expense; a $3.0 million increase in reimbursed direct costs, which directly corresponds to the increase in operating revenue from reimbursed direct costs; a $0.4 million increase in outside services; a $0.2 million increase in production supplies; a $0.2 million increase in professional fees; and a $1.1 million increase in call center services.
During the six months ended June 30, 2009, our operating activities provided net cash of $21.0 million. Contributing to net cash provided by operating activities was net income of $6.2 million and increased non-cash expenses, such as depreciation and amortization and share-based compensation expense, of $17.1 million. These items were partially offset by a $3.0 million net use of cash resulting from changes in operating assets and liabilities. The most significant change in operating assets and liabilities was a $6.3 million increase in trade accounts receivable, related to several large matters in the bankruptcy and electronic discovery segments. Trade accounts receivable will fluctuate from period to period depending on the timing of sales and collections. Partially offsetting the increase in accounts receivable was an increase in accounts payable and other liabilities of $3.9 million. Accounts payable will fluctuate from period to period depending on timing of purchases and payments.
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EPIQ Systems Inc. develops markets and licenses proprietary software solutions for workflow management and data communications infrastructure that serve the bankruptcy trustee market and financial services market. EPIQ Systems Inc. has a market cap of $588 million; its shares were traded at around $16.31 with a P/E ratio of 34 and P/S ratio of 2.5. EPIQ Systems Inc. had an annual average earning growth of 36.5% over the past 10 years. GuruFocus rated EPIQ Systems Inc. the business predictability rank of 3.5-star.
Highlight of Business Operations:
The direct cost of services, exclusive of depreciation and amortization, was $19.7 million for the three months ended June 30, 2009, a decrease of $4.7 million, or 19%, as compared to $24.4 million in the prior year. Contributing to this decrease was a $3.9 million decrease in the cost of outside services, primarily related to temporary help and mailing; a $2.0 million decrease in legal noticing costs; and a $0.5 million decrease in production supplies. These decreases were partially offset by a $1.0 million increase in compensation related expense; a $0.3 million increase in software maintenance costs related to client service capabilities; a $0.2 million increase in equipment expense; and a $0.2 million increase in insurance expense. Changes by segment are discussed below.Bankruptcy direct and administrative expenses increased $7.6 million, or 104%, to $14.8 million for the three months ended June 30, 2009, compared to $7.2 million in prior year. The increase is primarily attributable to a $2.5 million increase in compensation related expense, due primarily to expanded staffing in support of new client engagements; a $1.5 million increase in outside services expense; a $2.3 million increase in reimbursed direct costs, which directly corresponds to the increase in operating revenue from reimbursed direct costs; a $0.4 million increase in noticing expense; and a $0.6 million increase in call center services.
Operating Expense The direct cost of services, exclusive of depreciation and amortization, was $39.4 million for the six months ended June 30, 2009, a decrease of $3.9 million, or 9%, as compared to $43.3 million in the prior year. Contributing to this decrease was a $5.1 million decrease in legal noticing costs and a $3.1 million decrease in the cost of outside services, primarily related to temporary help and mailing in the prior year period. These decreases were partially offset by an increase of $2.3 million in compensation related expense; a $1.0 million increase in production supplies; a $0.6 million increase in software maintenance costs; a $0.3 million increase in equipment expense; and a $0.2 million increase in insurance expense.
Electronic discovery direct and administrative expenses increased $3.9 million, or 26%, to $19.1 million for the six months ended June 30, 2009, compared with $15.2 million in the prior year. This increase is primarily a result of a $2.3 million increase in compensation, commission and benefits expense, and $0.2 million increase in travel and entertainment expense, resulting from the expansion of services and geographic expansion of our business; a $0.5 million increase in the outside services; a $0.5 million increase in software maintenance costs; and a $0.3 million increase in building and equipment lease expense, primarily related to data center expansion.
Bankruptcy direct and administrative expenses increased $11.1 million, or 78%, to $25.2 million for the six months ended June 30, 2009, compared to $14.1 million in prior year. The increase is primarily attributable to a $3.5 million increase in compensation related expense, due to expanded staffing in support of new client engagements; a $2.5 million increase in outside services expense; a $3.0 million increase in reimbursed direct costs, which directly corresponds to the increase in operating revenue from reimbursed direct costs; a $0.4 million increase in outside services; a $0.2 million increase in production supplies; a $0.2 million increase in professional fees; and a $1.1 million increase in call center services.
During the six months ended June 30, 2009, our operating activities provided net cash of $21.0 million. Contributing to net cash provided by operating activities was net income of $6.2 million and increased non-cash expenses, such as depreciation and amortization and share-based compensation expense, of $17.1 million. These items were partially offset by a $3.0 million net use of cash resulting from changes in operating assets and liabilities. The most significant change in operating assets and liabilities was a $6.3 million increase in trade accounts receivable, related to several large matters in the bankruptcy and electronic discovery segments. Trade accounts receivable will fluctuate from period to period depending on the timing of sales and collections. Partially offsetting the increase in accounts receivable was an increase in accounts payable and other liabilities of $3.9 million. Accounts payable will fluctuate from period to period depending on timing of purchases and payments.
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