Dolan Media Q3 Profit More Than Doubles; Lifts FY09 EPS View

11/6/2009 10:15 AM ET

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(RTTNews) - Business information and professional services provider Dolan Media Company (DM: News ) Friday reported a sharp rise in net income for the third quarter, as revenues grew more than 55% in its professional services division. Reflecting the strong results and its latest acquisitions, the company raised its earnings outlook for the full year.

Net income attributable to the company more than doubled to $5.87 million or $0.20 per share from $2.45 million or $0.09 per share in the prior-year quarter.

Cash earnings for the quarter grew to $8.78 million or $0.29 per share from $5.78 million or $0.21 per share in the year-ago quarter.

On an average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.16 per share for the quarter. Analysts' estimates typically exclude special items.

The Minneapolis-based company's quarterly total revenues rose 30.2% to $62.34 million from $47.88 million in the comparable period. Three analysts estimated revenues of $61.03 million for the quarter.

Segment-wise, revenues from professional services division were $40.00 million, up 55.8% from $25.67 million last year, due to a $16.9 million increase in mortgage default processing services revenues from Barrett-NDEx, which the company acquired in September 2008.

Revenues from business information segment increased marginally to $22.35 million from $22.21 million in the previous year.

For the quarter, Dolan Media recorded a 430 basis points increase in net income margin to 9.4%, and operating income margin rose 520 basis points to 18.4%.

At the end of the third quarter, Dolan Media had $20.6 million of cash and cash equivalents compared to $2.5 million at the end of 2008.

For the nine month period, net income surged to $22.72 million or $0.76 per share from $10.86 million or $0.42 per share in the comparable period. Year-to-date, total revenues were $193.32 million, higher than $130.95 million a year ago.

In October, the company announced the acquisition of mortgage default processing operations of the Albertelli Law Firm in an effot to expand into Florida, an important default growth state. Separately today, Dolan Media announced the acquisition of an 85% interest in DiscoverReady, which is expected to help the company expand into discovery management and document review services.

Citing these acquisitions and the third quarter results, Dolan Media raised its full year 2009 guidance for net income attributable to the company to a range of $0.94 to $0.98 per share from the previous forecast of $0.83 to $0.91 per share. The company also raised its full year cash earnings outlook to a range of $1.30 to $1.33 per share from its prior guidance of $1.21 to $1.29 per share.