Quarterly Revenues Increase 44% and YTD Revenues Increase 29% Year
over Year PLANTATION, Fla., Feb. 9 /PRNewswire-FirstCall/ -- DJSP
Enterprises, Inc. (NASDAQ:DJSPNASDAQ:DJSPWNASDAQ:DJSPU), one of the
largest providers of processing services for the mortgage and real
estate industries in the United States, today announced financial
results for the three and nine month periods ending September 30,
2009 for its recently acquired processing operations. The operating
results discussed in this press release reflect the separate
operations of the acquired business for the periods presented on an
adjusted basis, each of which occurred prior to the closing of the
Business Combination with Chardan 2008 China Acquisition Corp on
January 15, 2010. Processing Operations Third Quarter Financial
Highlights -- Revenue for the quarter increased 44% to $73.0
million from $50.6 million in last year's comparable period. For
nine months, revenue increased 29% year over year to $189.8
million. -- Adjusted Net income was $10.4 million in the third
quarter. For the nine month period, adjusted net income was $32.4
million or $1.65* per share. -- Adjusted EBITDA for the third
quarter was $16.4 million, and for the nine months was $50.7
million. *Calculated using treasury stock method assuming a common
share price of $8.14; Assumes 19.62 million shares outstanding;
Assumes adjusted net income for nine months ended September 30,
2009 of $32.4 million. Subsequent to Quarter End Chardan 2008 China
Acquisition Corp. closed its business combination with DAL Group,
LLC on January 15, 2010 and changed its name to DJSP Enterprises,
Inc. and its NASDAQ symbols to DJSP, DJSPU and DJSPW. Third Quarter
Results for Processing Operations Net revenue from operations for
the three months ended September 30, 2009 increased $22.4 million,
or 44%, to $73.0 million from $50.6 million in last year's
comparable period. The revenue improvement resulted from an
increase in the number of mortgage foreclosures taking place in the
Company's principal market, Florida, as well as the expansion of
REO (bank-owned) activities. During the three months ended
September 30, 2009, revenue from mortgage foreclosure related
services, net of revenue from client reimbursements, increased by
$4.9 million, or 21%, to $28.0 million, compared to $23.1 million
for the same period last year. Our REO liquidation business, which
emanates from a single customer, became an increasingly significant
source of revenue during the quarter, generating $3.0 million in
revenue, with approximately an 88% gross margin. Revenue for the
same three months of 2008 was $1.2 million. Going forward,
management intends to offer both REO closing and liquidation
services to additional customers as a means of increasing revenues
and profits. The remainder of the increase in revenue was due to
increased client-reimbursed costs. Adjusted net income increased to
$10.4 million for the three months ended September 30, 2009.
Year-to-Date Results Net revenue for the nine months ended
September 30, 2009 increased $43.4 million, or 29%, to $189.8
million from $146.3 million in last year's comparable period. The
revenue improvement resulted from an increase in the number of
mortgage foreclosures taking place in the Company's principal
market, Florida, as well as the expansion of REO activities, which
increased approximately 208% to $7.9 million compared with $2.5
million in the same period in 2008. Revenues from mortgage
foreclosure related services, net of revenue from client
reimbursements, increased by $11.8 million, or 15%, to $89.0
million, compared to $77.2 million for the same period last year.
Revenues from our REO liquidation business increased by $5.4
million, or 208% to $7.9 million, compared to $2.5 million for the
same period last year. The remainder of the increase in revenue
reflected increased amounts due for client-reimbursed costs. During
the first nine months of fiscal 2009, the Company's adjusted net
income increased to $32.4 million. The Company generated $41.8
million in cash from operating activities in the nine months ended
September 30, 2009, compared to $38.9 million in the nine months
ended September 30, 2008. David J. Stern, Chairman and Chief
Executive Officer of DJSP Enterprises commented, "DJSP delivers
unparalleled customer service by combining unique mortgage and
foreclosure expertise with highly automated electronic processing.
This efficiency has historically enabled us to significantly grow
both our top and bottom-line results. As a public company we will
be able to leverage our expertise, diversify our service offerings,
and expand geographically in order to accelerate our growth and
enhance our client relationships. Going forward, we are
particularly excited about our REO business which will become an
increasingly significant source of revenue and income growth in the
coming years." Management Guidance: The Company reaffirms its
previously announced guidance of approximately $42 million in
adjusted net income and $67.8 million in adjusted EBITDA for
Calendar 2009. For 2010, the Company expects to report adjusted net
income of approximately $49 million and adjusted EBITDA of
approximately $80.6 million, excluding any one time transaction
expenses associated with the Business Combination. Conference call
Information: Management will conduct a conference call at 9:30 a.m.
Eastern Time on Wednesday, February 10, 2010, to discuss the third
quarter 2009 results. To participate in the live conference call,
please dial the following number five to ten minutes prior to the
scheduled conference call time: 1-877-941-1430. International
callers should dial 1-480-629-9667. When prompted by the operator,
mention conference ID 4224362. If you are unable to participate in
the call at this time, a replay will be available for one week
starting on Wednesday, February 10, 2010, at 12:30 p.m. Eastern
Time. To access the replay, dial 1-800-406-7325 or 1-303-590-3030.
Please use passcode 4224362. The call will also be accompanied live
by webcast over the Internet and accessible at
http://viavid.net/dce.aspx?sid=000070E6 About DJSP Enterprises,
Inc. DJSP is one of the largest providers of processing services
for the mortgage and real estate industries in Florida and one of
the largest in the United States. The Company provides a wide range
of processing services in connection with mortgages, mortgage
defaults, title searches and abstracts, REO (bank-owned)
properties, loan modifications, title insurance, loss mitigation,
bankruptcy, related litigation and other services. The Company's
principal customer is the Law Offices of David J. Stern, P.A. whose
clients include all of the top 10 and 17 of the top 20 mortgage
servicers in the United States, many of which have been customers
for more than 10 years. The Company has approximately 1,000
employees and contractors and is headquartered in Plantation,
Florida, with additional operations in Louisville, Kentucky and San
Juan, Puerto Rico. The Company's U.S. operations are supported by a
scalable, low-cost back office operation in Manila, the Philippines
that provides data entry and document preparation support for the
U.S. operation Forward Looking Statements This press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, about DJSP
Enterprises, Inc. Forward looking statements are statements that
are not historical facts. Such forward-looking statements, based
upon the current beliefs and expectations of the Company's
management, are subject to risks and uncertainties, which could
cause actual results to differ from the forward looking statements.
The following factors, among others, could cause actual results to
differ from those set forth in the forward-looking statements:
business conditions, changing interpretations of generally accepted
accounting principles; outcomes of government or other regulatory
reviews, particularly those relating to the regulation of the
practice of law; the impact of inquiries, investigations,
litigation or other legal proceedings involving the Company or its
affiliates, which, because of the nature of the Company's business,
have happened in the past to the Company and the Law Offices of
David J. Stern, P.A.; the impact and cost of continued compliance
with government or state bar regulations or requirements;
legislation or other changes in the regulatory environment,
particularly those impacting the mortgage default industry;
unexpected changes adversely affecting the businesses in which the
Company is engaged; fluctuations in customer demand; the Company's
ability to manage rapid growth; intensity of competition from other
providers in the industry; general economic conditions, including
improvements in the economic environment that slows or reverses the
growth in the number of mortgage defaults, particularly in the
State of Florida; the ability to efficiently expand its operations
to other states or to provide services not currently provided by
the Company; the impact and cost of complying with applicable SEC
rules and regulation, many of which the Company will have to comply
with for the first time after the closing of the business
combination; geopolitical events and changes, as well as other
relevant risks detailed in the Company's filings with the U.S.
Securities and Exchange Commission, (the "SEC"), including its
report on Form 20-F for the period ended December 31, 2008 and the
Form 6-K filed with the SEC on December 29, 2009 containing the
proxy statement relating to the Business Combination which was
mailed to shareholders of the Company, in particular, those listed
under "Risk Factors." The information set forth herein should be
read in light of such risks. The Company does not assume any
obligation to update the information contained in this press
release. Non-GAAP Financial Measures The financial information and
data contained in this press release are unaudited and do not
conform to the SEC's Regulation S-X.. This press release includes
certain estimated financial information and forecasts presented as
pro forma financial measures that are not derived in accordance
with generally accepted accounting principles ("GAAP"), and which
may be deemed to be non-GAAP financial measures within the meaning
of Regulation G promulgated by the SEC. Management believes that
the presentation of these non-GAAP financial measures serves to
enhance the understanding of the financial performance of the
acquired business. Our Non-GAAP financial measures may not be
comparable to similarly titled pro forma measures reported by other
companies. Such measures are not recognized terms under U.S. GAAP,
and should be considered in addition to, and not as substitutes
for, or superior to, operating income, cash flows, revenues, or
other measures of financial performance prepared in accordance with
generally accepted accounting principles. Such measures are not a
completely representative measure of either the historical
performance or, necessarily, the future potential of the Company.
Adjusted EBITDA - The adjusted EBITDA measure presented consists of
income (loss) from continuing operations before (a) interest
expense, net; (b) income tax expense; (c) depreciation and
amortization; and (d) non-recurring income and/or expense. The
Company is providing adjusted EBITDA, a non-GAAP financial measure,
along with GAAP measures, as a measure of profitability because
adjusted EBITDA helps the Company to evaluate and compare its
performance on a consistent basis with the lower operating cost
structure that will be in place after consummation of the Business
Combination. In the calculation of adjusted EBITDA, the Company
excludes from expenses the compensation paid to the Company's
Founder that exceeds the base compensation that he will be entitled
to receive after completion of the Business Combination, as well as
the payroll taxes associated with such compensation, non-recurring
travel expenses incurred on behalf of the Founder and other
benefits received in prior periods that will not be permitted in
following the closing of the Business Combination. Adjusted EBITDA
is a non-GAAP measure that has limitations because it does not
include all items of income and expense that affect the operations
of the Company. In addition, it should be noted that companies
calculate adjusted EBITDA differently and, therefore, adjusted
EBITDA as presented for us may not be comparable to the
calculations of adjusted EBITDA reported by other companies.
Adjusted Net Income - The Company is providing adjusted Net Income,
a non-GAAP financial measure, along with GAAP measures, as a
measure of profitability because adjusted Net Income helps the
Company to evaluate and compare its past performance on a
consistent basis with the taxable structure that will be in place
after consummation of the transaction, reflecting the effects of
that taxable structure on profitability. In the calculation of
adjusted Net Income, the Company deducts the Depreciation and
Amortization amounts to the Adjusted EBITDA calculation and then
subtracts the income tax expense, calculated at the expected 'going
forward' tax rate of 35% from such figure. Adjusted Net Income per
share is calculated by dividing adjusted Net Income by the number
of ordinary shares outstanding using the treasury stock method. A
reconciliation of adjusted EBITDA and adjusted Net Income is not
provided below for 2009 and 2010 because the exact amount of the
adjustments described in this section are not currently
determinable, in particular adjustments to the services fee due to
processing, interest, depreciation and amortization. The following
tables provide reconciliations of net income (US GAAP) to Adjusted
EBITDA (Non-GAAP) and adjusted Net Income (Non-GAAP) 9 Months 3
Months 3 Months Ended Ended Ended ----------- -----------
---------- 30-Sep-09 30-Sep-09 30-Sep-08 ----------- -----------
---------- Net Income $40,598,406 $13,143,565 $5,544,308 Adjustment
Adj. to Fee to Processing 2,372,633 1,331,194 4,663,450 Officers'
Salaries 2,230,000 60,000 2,170,000 Non-Recurring Travel 2,191,547
734,490 894,811 Other Non-Recurring Salary & Benefits 1,519,971
-107,875 1,597,894 Payroll Tax 21,606 -1,564 23,169 Interest,
Depreciation & Amortization 970,957 369,536 510,156 Other
Income (Expense) 836,229 836,229 592,200 ----------- -----------
---------- Total Adjustments 10,142,943 3,222,010 10,451,680
Adjusted EBITDA $50,741,349 $16,365,575 $15,995,988 ===========
=========== =========== Adjustments to Reconcile Pro-Forma Net
Income Interest, Depreciation & Amortization 970,957 369,536
369,536 Other Income (Expense) - - - Tax (Estimated at 35%)
17,419,637 5,598,614 5,469,258 ----------- ----------- ----------
Total Adjustments 18,390,594 5,968,150 5,838,794 Adjusted Net
Income $32,350,755 $10,397,425 $10,157,194 =========== ===========
=========== -tables follow- The financial results contained in the
attached tables are not necessarily indicative of the operations of
the business following the closing, in particular because the
processing operations were not subject to income taxes prior to the
closing of the Business Combination, certain private company
expenses and compensation included in the reported operating
results will not continue post-closing and varied materially from
period to period, reported results do not include interest expenses
associated with the Business Combination financing and the reported
results have not been adjusted for the noncontrolling interest
resulting from the Business Combination. DJS PROCESSING DIVISION
AND ITS COMBINED AFFILIATES UNAUDITED FINANCIAL STATEMENTS For the
Nine Months Ended September 30, 2009 DJS PROCESSING DIVISION AND
ITS COMBINED AFFILIATES (A Division of The Law Offices of David J.
Stern, P.A.) COMBINED CARVE OUT BALANCE SHEETS September 30,
December 31, 2009 2008 ------------ ----------- ASSETS (Unaudited)
Current Assets Cash and cash equivalents $3,034,044 $1,427,588
---------- ---------- Accounts receivable Client reimbursed costs
4,597,526 26,147,837 Fee income, net 21,889,787 11,807,293 Unbilled
receivables 7,808,878 11,210,565 ---------- ---------- Total
accounts receivable 34,296,191 49,165,695 ---------- ----------
Prepaid expenses 132,811 46,939 Total current assets 37,463,046
50,640,222 ---------- ---------- Property and Equipment, net
4,394,531 3,154,623 ---------- ---------- Total assets $41,857,577
$53,794,845 =========== =========== LIABILITIES AND STOCKHOLDER'S
AND MEMBER'S EQUITY Current Liabilities Accounts payable -
reimbursed client costs $4,597,526 $20,425,337 Accounts payable
1,404,644 742,601 Accrued compensation 2,066,788 2,207,094 Accrued
expenses 1,827,562 976,643 Current portion of capital lease
obligations 48,113 217,095 Deferred revenue 263,900 263,900 Due to
related party 80,594 25,035 Note payable 2,448,000 - Line of credit
10,873,599 - Current portion of deferred rent 974,904 821,464
---------- ---------- Total current liabilities 24,585,630
25,679,169 ---------- ---------- Deferred rent, less current
portion 93,246 137,859 Capital lease obligation, less current
portion 485,277 512,168 ---------- ---------- Total liabilities
25,164,153 26,329,196 Commitment and contingencies Common stock
1,000 1,000 Retained earnings 7,646,028 7,608,920 Member's equity
9,046,396 19,855,729 ---------- ---------- Total stockholder's and
member's equity 16,693,424 27,465,649 ---------- ---------- Total
liabilities, stockholder's and member's equity $41,857,577
$53,794,845 =========== =========== DJS PROCESSING DIVISION AND ITS
COMBINED AFFILIATES (A Division of The Law Offices of David J.
Stern, P.A.) COMBINED CARVE OUT STATEMENTS OF INCOME For the For
the For the For the Nine Months Nine Months Three Months Three
Months Ended Ended Ended Ended September September September
September 30, 2009 30, 2008 30, 2009 30, 2008 ---------- ----------
---------- ---------- (Unaudited) (Unaudited) (Unaudited)
(Unaudited) Revenue $189,770,734 $146,329,545 $73,004,323
$50,634,759 ------------ ------------ ----------- -----------
Operating expenses: Direct operating & other expenses
17,474,873 11,563,845 6,200,278 4,614,449 Client reimbursed costs
100,811,738 69,167,390 45,014,958 27,541,750 Compensation related
expenses 29,914,400 29,991,149 8,275,986 12,609,905 Depreciation
expense 776,074 858,909 265,918 286,303 Interest expense 194,883
59,725 103,618 38,044 ------------ ------------ -----------
----------- Total operating expenses 149,171,968 111,554,293
59,860,758 45,090,451 ------------ ------------ -----------
----------- Net Income $40,598,406 $34,688,527 $13,143,565
$5,544,308 ============ ============ =========== =========== DJS
PROCESSING DIVISION AND ITS COMBINED AFFILIATES (A Division of The
Law Offices of David J. Stern, P.A.) COMBINED CARVE OUT STATEMENTS
OF CASH FLOWS For the For the Nine Months Nine Months Ended Ended
September 30, September 30, 2009 2008 -------------- --------------
(Unaudited) (Unaudited) Cash Flows From Operating Activities Net
income $40,598,406 $34,688,527 Adjustments to reconcile net income
to net cash provided by operating activities: Depreciation 776,074
858,909 Changes in operating assets and liabilities: (Increase)
decrease in: Accounts receivable - client reimbursed costs
21,550,311 (5,026,316) Fee income receivable, net (10,082,494)
(1,644,837) Unbilled receivable 3,401,687 (1,004,092) Prepaid
expenses (85,872) (424,367) Accounts payable - client reimbursed
costs (15,827,811) 9,690,536 Accounts payable 662,043 919,010
Accrued expenses 850,921 441,571 Accrued compensation (140,306)
357,152 Deferred rent 108,827 - Net cash provided by operating
activities 41,811,786 38,851,695 ---------- ---------- Cash Flows
From Investing Activities Purchase of property and equipment
(2,015,984) (2,331,885) ---------- ---------- Net cash flow used
for investing activities (2,015,984) (2,331,885) ----------
---------- Cash Flows From Financing Activities Net advance from
related party 55,559 (853) Advances on line of credit 10,873,599 -
Advances on note payable 2,448,000 - Principal payments on capital
lease obligations (195,874) - Distributions (51,370,630)
(36,507,112) ----------- ----------- Net cash flow used for
financing activities (38,189,346) (36,507,965) -----------
----------- Net change in cash and cash equivalents 1,606,456
11,845 Cash and cash equivalents, beginning of period 1,427,588
978,766 ---------- ---------- Cash and cash equivalents, end of
period $3,034,044 $990,611 ========== ========== Supplemental
Disclosures of Cash Flow Information Cash payments for interest
$194,883 $38,044 DATASOURCE: DJSP Enterprises, Inc. CONTACT: David
J. Stern, Chairman and CEO, +1-954-233-8000, ext. 1113, , or Kumar
Gursahaney, Executive Vice President and CFO, +1-954-233-8000, ext.
2024, , both of DJSP Enterprises, Inc.; or Investors: Cameron
Donahue of Hayden IR, +1-651-653-1854, Web Site:
http://viavid.net/dce.aspx?sid=000070E6
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