Davis + Henderson reported solid financial results for the three and nine months ended September 30, 2008.
Third Quarter Highlights
- Revenue in the third quarter of 2008 was $97.3 million, an increase of $2.6 million, or 2.8%, compared to $94.7 million in the same quarter in 2007.
- Net income increased 11.6% to $0.5303 per unit compared to the same period last year. Excluding the non-cash impact of unrealized gains and losses on interest-rate swaps and the charge for future income taxes, net income was 10.3% higher compared to a year ago.
- Declared distributions in the third quarter of 2008 of $0.4599 per unit were 16.1% higher than in the third quarter of 2007.
Nine-Month Highlights
- Revenue for the nine-month period ending September 30, 2008 was $283.7 million, a decrease of $4.1 million, or 1.4%, compared to $287.8 million in the same period in 2007. This year-over-year decrease reflects lower revenues in the D+H Segment in the first six months of 2008, partially offset by increases in the Filogix Segment. The lower level of revenue within the D+H Segment was primarily attributed to reduced cheque order volumes as compared to the unusually strong order volumes in 2007.
- Net income per unit decreased by 1.7% to $1.4680, compared to the first nine months of 2007. Excluding the non-cash impact of unrealized gains and losses on interest-rate swaps and the charge for future income taxes, net income was 2.8% higher than a year ago.
- Declared distributions for the first nine months of 2008 of $1.3385 per unit were 13.4% higher than in the first nine months of 2007.
Management Commentary
The Business performed well during the third quarter of 2008 as revenue growth in the D+H Segment returned and our Filogix Segment delivered revenues above our expectations. The positive contribution from the continued expansion of our customer programs and effective cost management allowed the Business to produce strong cash flow for our unitholders.
In the D+H Segment, we benefited from the contribution of our IDefence and BizAssist programs and from our annual product repositioning initiatives earlier in the year. Through the early part of the year, the benefit of these initiatives was offset by lower cheque order volumes compared to 2007. As reported previously, cheque order volumes within the Business fluctuated outside of normal patterns during much of 2007, when we had higher order volumes than normally expected, and throughout the first six months of 2008, when we had reduced order volumes. In both cases, these variances were primarily related to changes in Canadian cheque imaging initiatives.
Within our Filogix Segment, increased revenues in several areas contributed to modest year-over-year growth. We are pleased with the Filogix Segment performance, which was achieved despite the softening from a previously strong real estate market.
Davis + Henderson remains committed to its long-term financial objective of delivering stable and modestly growing distributions based on achieving annual revenue growth in the 3% to 5% range. Financial results may, however, be more variable and negatively affected in the short term given the uncertainty in many markets. Historically cheque order volumes, which generate approximately 80% of our consolidated revenues, have not varied significantly with changes in economic activity. Origination and underwriting revenues within the Filogix Segment are however likely to be negatively impacted by changes in the economy and in the real estate and mortgage markets. -- www.cnxmarketlink.com
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