- Posts Second Quarter Fully Diluted EPS of 36 Cents
- Operating Income Reaches $3.5 Million vs. Prior Year Loss
- Increased Efficiencies Result in Gross Margin of 55 Percent
- EBITDA Grows to $4.7 Million
Questar Assessment, Inc. (OTCBB: QUSA) today reported strong increases in revenue, EBITDA * (earnings before interest, taxes, depreciation and amortization) and net income for the second quarter of fiscal 2007. Revenues in the second quarter ended April 30, 2007 increased 365% to $16.2 million from $3.5 million in the second quarter of 2006. Revenues for the six months ended April 30, 2007 increased 293% to $25.8 million from $6.6 million in the second quarter of 2006.
Effective May 31, 2006, the Company acquired Questar Educational Systems, Inc. (“QES”). That acquisition along with organic growth from the Company’s existing revenue sources fueled both the six-month and quarterly revenue increases. Proforma revenue increased 9% from $23.7 million to $25.8 million for the six months ended April 30, 2007. Pro forma revenue increased 7% for the quarter ended April 30, 2007 from $15.1 million to $16.2 million.
“Our second quarter results are a reaffirmation that our organization made the appropriate decision when we acquired Questar Educational Systems last year,” said Andrew L. Simon, president and CEO. “The integration of QES into the existing organization is starting to achieve meaningful results and we are taking advantage of our new scale.
The Company’s second quarter performance is an especially good example of that successful integration. “Our business has seasonality associated with it,” Simon explained. “The February through June period is our busiest since we follow the school year calendar. During such periods, it is vital that we are ‘clicking on all cylinders.’ Our results during this recent peak cycle will ensure that all of our constituencies, including our clients and shareholders, are beneficiaries of our performance. We provide – and will continue to provide – exceptional customer service and execution, which will always translate into financial success for an organization.”
Simon further stated: “We recorded net income of $1,871,296, or $.36 per diluted share on 5,132,154 shares outstanding, in the second quarter. This record net income level during the current quarter has been achieved despite the fact that we amortized $650,000 in expense due to the recognition of certain intangible value associated with customer contracts acquired from QES. This amortization expense reduced second quarter fully diluted earnings per share by $.07. As we have previously discussed, we feel the best indicator for our financial performance is EBITDA *. Our EBITDA for the six months ended April 30, 2007 was $5.1 million or $.99 cents per fully diluted share.”
* - EBITDA is not a measure of financial performance under accounting principles generally accepted in the U.S. or by GAAP, and should not be considered an alternative to net income, or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash flows or a measure of liquidity.
PRO FORMA RESULTS (beginning of earliest reported period - November 1, 2005)
On a comparative pro forma basis, after giving effect to the Questar acquisition as of the earliest reporting period November 1, 2005, EBITDA increased to $4.7 million in the current quarter from approximately $3.2 million in the second quarter of last year. Comparative pro forma revenues increased to $16.2 million this quarter from $15.1 million in the second quarter a year ago. Pro forma EBITDA per fully diluted share for the second quarter fiscal 2007 was $.91 versus a pro forma $.63 for the second quarter a year earlier.
GROSS MARGINS / OVERHEAD COSTS
“Gross margin in the second quarter was 55%,” Simon stated. “This was slightly higher than we anticipated because we have begun to achieve some efficiency due to our new internal capabilities. I still believe as we continue to mature as a fully integrated company we will be able to leverage margins, selling and overhead costs even more effectively than we have witnessed to date.”
MANAGEMENT COMMENTS
Simon concluded: “This has been an outstanding quarter for our company in many ways. The fiscal results for the current quarter demonstrate that the work done by our employees and management and their accomplishments since the QES acquisition are now paying dividends.” As we are winding down the critical execution phase of our current project season, we will turn our undivided attention to adding new business opportunities for future years as well as reevaluating all systems to enhance efficiencies and our performance to our customer base. We have now demonstrated that we can deliver results, and I am confident that state governments along with other business partners will look to Questar Assessment as an industry leader.”
CONFERENCE CALL Thursday June 14, 2007 at 11:00 a.m. EDT
Management will host a conference call this morning to discuss second quarter fiscal 2007 results. The call is scheduled to begin at 11:00 a.m. EDT. Participants may dial: 1-201-689-8471 for the live call. The call will also be web cast live and archived for three months. The web cast can be accessed at: http://viavid.net/dce.aspx?sid=000040A5
ABOUT QUESTAR ASSESSMENT, INC. (formerly TASA)
Questar Assessment, Inc. headquartered in Brewster, N.Y., offers a comprehensive suite of educational assessment solutions to states, schools, school districts and to third parties. As one of the nation’s leading providers, Questar provides products and services that range from test design, development, calibration, and psychometric services through print production, distribution, scanning, scoring, reporting, and data analysis services. To meet the requirements in electronic assessment, Questar offers on-line testing services to schools and educational entities in the K-12 market as well as customized assessment engines for curriculum providers. For more information, visit the company’s new website at www.questarai.com.
Statements contained in this release that are not historical facts are “forward-looking” statements as contemplated by the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are subject to risks and uncertainties, which are enumerated in the company’s reports filed with The Securities and Exchange Commission. These risks and uncertainties could cause actual results to differ materially from those projected or implied in the forward-looking statements.
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