Epiq Systems earnings lower on push for growth

Epiq Systems Inc., based in Kansas City, Kan., earned $4.2 million, or 11 cents a share, in the third quarter.

The profit was sharply lower than a year ago when an adjustment related to an acquisition boosted reported earnings substantially without providing any cash to the company. Epiq reported $11.3 million in profits, or 31 cents a share, in the third quarter a year ago.

Ignoring the big adjustment last year, the recent quarterly earnings were slightly smaller than a year ago, Epiq said. The 11 cents a share earned in the recent quarter would correspond to 12 cents a share earnings a year ago.

Revenues grew in the quarter, but the company spent more to gain the new customers and a larger share of the eDiscovery legal services market. The company helps law firms and businesses store legal information electronically and review documents as its main business.

“The opportunity was ripe to take market share,” chief executive officer Tom Olofson told investors Monday during a conference call.

He said the spending, equal to 5 cents or 6 cents a share in earnings so far this year, continued into the fourth quarter to “cement” the company’s leadership in the industry.

Revenue in the three months that ended Sept. 30 was $115.7 million, up from $91 million a year earlier. Olofson emphasized that the increase represented new business the company won through competition and clients’ growth rather than any acquisitions.

Through the end of this year, Epiq should report operating revenue of $425 million to $430 million, compared with $317.7 million in operating revenues through September.

Epiq also provides services in bankruptcy and tort settlement cases. It shares closed Monday at $13.99, down 1 cent, before the release of its earnings report.

This story was originally published October 28, 2013 at 4:44 PM with the headline "Epiq Systems earnings lower on push for growth."