Monday, TNS, Inc. (TNS), a provider of data communications services, reported a higher profit for the third quarter on a 58.1% increase in revenue driven by the CSG acquisition. The company also provided its fourth-quarter outlook and adjusted its guidance for full year 2009.
The Reston, Virginia-based company's third-quarter net income increased to $3.2 million or $0.12 per share from $1.9 million or $0.07 per share a year ago.
On a non-GAAP basis, net income rose to $4.4 million or $0.17 per share from $2.4 million or $0.09 per share in third quarter of 2008.
On average, six analysts polled by Thomson Reuters estimated earnings of $0.62 per share for the quarter. Analysts' estimates typically exclude special items.
Third quarter results included pre-tax charges associated with severance of $1.7 million or $0.05 per share for 2009, compared to $0.7 million or $0.02 per share in 2008.
Revenue for the third quarter increased 58.1% to $140.1 million from $88.6 million in the year-earlier quarter. Analysts expected revenues of $140.81 million for the quarter.
Segment wise, revenue from International Services Division decreased 14.0% to $35.9 million, with the adverse affect of foreign currency translation at $3.7 million. Revenue from Financial Services Division increased 2.4% to $12.0 million, primarily through continued growth in the number of customer endpoints connected to TNS network.
Revenue from Telecommunication Services Division increased to $72.4 million from $16.5 million last year, primarily due to the inclusion of the acquired CSG business. Revenue from POS Division increased 5.7% to $19.8 million, due to a $1.2 million increase in revenue from sales of managed broadband services and a $1.2 million increase in ATM processing revenue.
Gross margin for the third quarter increased to 53.7% from 53.4% in the third quarter of 2008. On a constant dollar basis, gross margin increased to 53.9%.
Income from operations increased to $15.73 million from $7.13 million in the year-earlier quarter.
Henry Graham, chief executive officer of TNS, said, "TNS' execution in the third quarter of 2009 remained solid despite a challenging environment, resulting in adjusted earnings per share, excluding severance charges, above our outlook range."
Looking ahead to the fourth quarter, the company expects earnings per share in the range of $0.62 to $0.68 per share, compared to $0.42 last year. The company estimates revenue to range between $137 million and $141 million, compared to $81.1 million in the prior-year quarter. On a consensus, analysts expect earnings of $0.67 per share on revenues of $144.19 million for the fourth quarter.
For full year 2009, the company revised up its earnings per share outlook slightly to range from $2.12 to $2.18 per share from $2.05 to $2.15 per share, reflecting primarily the anticipated CSG integration synergies as well as the out performance from TNS' third quarter outlook. The company moderated its revenue outlook slightly to be in the range of $474 to $478 million from prior outlook of $478 to $486 million. Analysts, on average, expect earnings of $2.15 per share on revenues of $482.29 million for the full year.
TNS closed Monday's regular trading at $28.90, up $0.64 or 2.26%, on a volume of 284 thousand shares on the New York Stock Exchange.
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