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Official Payments Holdings (OPAY)

Q2 2013 Earnings Call

May 09, 2013 5:00 pm ET


Jack Browne

Alex P. Hart - Chief Executive Officer, President and Director

Jeffrey W. Hodges - Chief Financial Officer, Principal Accounting Officer and Senior Vice President


Richard Lee Todaro - Kennedy Capital Management, Inc.

Bradford Alan Evans - Heartland Advisors, Inc.

Samuel Bergman

Gary F. Prestopino - Barrington Research Associates, Inc., Research Division



Welcome, and thank you for standing by. [Operator Instructions] Today's conference is being recorded. If you have any objections to this, please disconnect at this time.

And now I will turn the call over to your host, Mr. Jack Browne. Sir, you may begin.

Jack Browne

Thank you, and good afternoon. My name is Jack Browne, and I'm the controller for Official Payments. Welcome to today's call to review our fiscal year 2013 second quarter results.

After the market closed today, we issued a press release announcing Official Payments' financial results for the quarter ended March 31, 2013.

A copy of the press release can be found on the Investor Relations section of our website, We invite investors, who wish to speak to management about the company, to contact our CFO, Jeff Hodges, at (770) 325-3102 or by emailing him at A replay of today's call will be available later this evening on our investor website,, or by calling (866) 481-5021. The telephone replay will be available until 11:59 p.m. Eastern Time on June 7, 2013.

I want to remind you that various remarks that we may make on today's call about the company’s future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Management's Discussion and Analysis and Risk Factor section of our most recent annual report on Form 10-K, which is on file with the SEC, and those discussed in the Management's Discussion and Analysis and Risk Factor section of our quarterly report on Form 10-Q, which we filed with the SEC earlier today.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any other subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today.

In this call, references to Q2 2013, Q2, the quarter or the second quarter, refer to the quarter ended March 31, 2013. And references to fiscal 2013, FY '13 and the year refer to the fiscal year ending September 30, 2013.

We use the term client to refer to the various legal entities with whom we contract to provide our payment solutions. The term customers refers to consumers, who utilize our payment services to pay amounts due to our clients.

During this call, we will be referring to non-GAAP financial measures that are not prepared in accordance with Generally Accepted Accounting Principles. The 2 non-GAAP financial measures that we will be discussing today are Payment Solutions' net revenue and adjusted EBITDA from continuing operations.

During this call, when we use the terms net revenue and adjusted EBITDA, we're referring to Payment Solutions' net revenue and adjusted EBITDA from continuing operations. We define the non-GAAP financial measures used in this call and we have presented reconciliations of these non-GAAP financial measures on a historical basis to the most directly comparable GAAP measures in the press release that we issued earlier today. That press release was furnished to the SEC earlier today as an exhibit to a current report on Form 8-K.

The Form 8-K, including the press release that reconciles the non-GAAP financial measures to the most directly comparable GAAP measures, is available in the Investor Relations section of our website,, under the heading Investor Relations.

With me on the call today are Jeff Hodges, our CFO; and Alex Hart, our President and CEO.

I'll now turn the call over to Alex.

Alex P. Hart

Thanks, Jack, and welcome everyone. We're pleased to announce that we've delivered our sixth consecutive quarter of positive adjusted EBITDA. As we've discussed in the past, our business is predictably seasonal, and our second and fourth fiscal quarters are historically our weakest. So the fact that our Q2 2013 results were as strong as they were is a very positive development.

We're also pleased to report that our IRS volume was particularly strong during the quarter, and that strength continued at record levels through April 15. This bodes very well for our anticipated third quarter results and is cause for optimism for the remainder of fiscal year '13 and beyond.

In a few minutes, I'll expand further on this optimism and update you on the status of the key initiatives that we've been discussing with you to date. But first, Jeff will review our second quarter financial results in more detail. Jeff?

Jeffrey W. Hodges

Thanks, Alex. We processed more than $2.3 billion of payments in Q2 2013, a 13.5% increase versus Q2 of 2012, resulting in net revenue of $12.1 million, a 4.6% increase over Q2 2012.

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