WellPoint Systems Announces Record Third Quarter Revenue



    CALGARY, Nov. 12 /CNW/ - WellPoint Systems Inc. ("WellPoint" or the
"Company") (TSX-V: WPS) the premier supplier of innovative software solutions
to the energy sector, today announced results for the three and nine-month
periods ended September 30, 2007. All dollar amounts are in Canadian dollars
unless otherwise stated.

    
    Operational and Financial Highlights

    -   Acquired essentially all the assets of Bolo Systems, Inc., a leading
        provider of integrated multi-tiered financial, land and production
        accounting solutions for the oil and gas industry in the United
        States;
    -   Increased revenue 56% to $6.7 million for the third quarter ended
        September 30, 2007 and 98% to $21.1 million for the first nine months
        of 2007 over the comparative periods in 2006;
    -   EBITDA for the third quarter of $0.5 million compared with
        $0.5 million in the third quarter of 2006. EBITDA of $3.3 million for
        the first nine months of 2007, up 118% when compared with
        $1.5 million for the comparable period of 2006;
    -   Named the 2007 Microsoft Dynamics(TM) Partner of the Year for Canada;
        and
    -   Reported net income of $198,208 in the third quarter of 2007 compared
        with $10,806 in the third quarter of 2006. Net income was
        $1.0 million for the first nine months of 2007 compared to $173,875
        in 2006.
    

    "We continue to generate improving top line performance on a year over
year basis thanks to the strategic acquisitions we've made in the last 18
months, however, adjusted EBITDA in the third quarter was partially impacted
by some one-time costs related to securing financing for the Bolo
acquisition," said Frank Stanford, CEO of WellPoint Systems. "We expect these
acquisitions will continue to play an important role in the expansion of our
business, especially in the U.S. and key international markets, in future
quarters."

    Financial Review

    Revenues grew 56% to $6.7 million in the third quarter of 2007, as
compared with $4.3 million in the third quarter of 2006. The increase for the
third quarter was attributable to growth from the 2007 acquisitions of Bolo
and iSoft. For the nine month period, revenues grew 98% to $21.1 million, as
compared with $10.7 million in the same period of 2006. The increase for the
nine month period was a result of the growth from the 2007 acquisitions and
also from the increase in revenue at Ideas in 2007 compared with the same
period in 2006 including software license revenue of $4.4 million reported in
the second quarter of 2007 from a software licensing, professional services
and maintenance contract with a South American oil company. This contract
represents the largest contract of its kind that the Company has entered into.
    Revenue growth from acquired businesses was significant for both the
three and nine month periods ended September 30, 2007 as the Company completed
three acquisitions since the beginning of 2006. These acquisitions contribute
to approximately $4.7 million, or 70% of total Q3 2007 revenue and
$13.5 million or 64% of total revenues for the nine-months ended September 30,
2007.
    Gross profit for the quarter ended September 30, 2007 was $5.4 million,
or 80% of total revenue, compared with $3.0 million, or 69% of total revenue
for the same period in 2006. The increase in gross profit dollars is
attributable to the overall in increase in revenue while the increase in gross
profit percentage can be attributed to the increase in our higher margin
maintenance revenue in the quarter and higher professional service revenue
with the majority of internal costs related to this revenue included in
general and administrative expenses.
    For the nine month period ended September 30, 2007 gross profit increased
to $15.2 million, or 72% of total revenue, compared with $7.9 million, or 74%
of total revenue, for the same period in 2006. The increase in gross profit
dollars is attributable to the overall increase in revenue while the decrease
in gross profit percentage and increase in direct costs can be attributed to
the increase in agents commissions included in directs costs in connection
with the sale of the Company's solutions primarily in international markets.
    General and administrative expenses increased to $4.9 million for the
quarter ended September 30, 2007 as compared with $2.5 million for the
comparable period of 2006. These expenses now represent 72% of revenues as
compared to 57% in 2006. The increase in expenses during the quarter include
additional salaries and benefits for the increase in staff required to support
the growth in professional service revenue, the additional general and
administrative expenses related to the two acquisitions in 2007 and
professional fees in connection with merger and acquisition and proposed
financing transactions that management decided not to proceed with. Salaries
and benefits account for the largest portion of the general and administrative
expense. General and administrative expenses increased to $11.9 million for
the nine month period ended September 30, 2007 as compared to $6.4 million for
the comparable period of 2006. These expenses now represent 57% of revenues as
compared to 60% in 2006. The increase in expenses during the period was due to
the same factors that increased expenses in the three month period ended
September 30, 3007.
    Following the acquisition of Bolo in August 2007, the Company
significantly increased its net liabilities denominated in United States
dollars in connection with approximately US$20 million of term notes payable
and term loan payable issued in connection with the acquisition. During the
third quarter of 2007, following the acquisition of Bolo, the Canadian dollar
strengthened vs. the United States dollar and accordingly the Company recorded
a foreign exchange gain of $1.1 million in the quarter.
    Management uses Adjusted EBITDA (earnings before interest, taxes, foreign
exchange, depreciation and amortization) as the best indicator of
profitability. Adjusted EBITDA was $0.5 million, or 8% of total revenue, for
the third quarter of 2007 as compared with $0.5 million, or 12% of total
revenue for the third quarter of 2006. The decrease in the Adjusted EBITDA
percentage of total revenue is primarily related to the higher proportion of
lower margin professional services revenue recorded in the third quarter ended
September 30, 2007 and $0.2 million of professional fees in connection with
merger and acquisition and proposed financing transactions that management
decided not to proceed with and which were included in general and
administrative expenses in the third quarter of 2007.
    For the nine months ended September 30, 2007, Adjusted EBITDA was
$3.3 million, or 15% of total revenue, compared with $1.5 million, or 14% of
total revenue, for the same period of 2006, an increase of $1.8 million. The
increase in the Adjusted EBITDA percentage of total revenue is primarily due
to the strong license revenue from sales in international markets, including
software license revenue of $4.4 million from the signing of a software
licensing, professional services and maintenance contract with a South
American oil company in second quarter of 2007.
    Net income increased to $0.2 million for the quarter ended September
30, 2007 as compared with nil for the comparable period in 2006. Net income
increased to $1.0 million for the nine months ended September 30, 2007 as
compared to $0.2 million for the comparable period of 2006. The increases in
2007 are primarily a result of the significant increase in revenue that
primarily resulted from acquisitions.
    Working capital totaled approximately nil at September 30, 2007. At
September 30, 2007, the Company had an operating credit facility in place with
the Company's banker, The Royal Bank of Canada, in the amount of $2.5 million.
As at September 30, 2007 the Company had drawn $1.8 million on this facility.

    
    Progress toward WellPoint's 2007 key strategy points:

    1. Exploit receptive U.S. & International markets.
       -   U.S. and International revenue represented 63% of total revenue
           for the first nine months of 2007.
    2. Pursue strategic acquisitions and partnerships that complement a
       focused corporate strategy.
       -   Acquired essentially all the assets of Bolo Systems, Inc. on
           August 13, 2007;
       -   WellPoint now owns the most valuable piece of mining intellectual
           property in the Microsoft application world with the first quarter
           2007 acquisition of iSoft; and
       -   WellPoint continues to look for new acquisition opportunities.
    3. Leverage a differentiated relationship with Microsoft.
       -   Named the 2007 Microsoft Dynamics(TM) Partner of the Year for
           Canada.
    

    The Company's quarterly financial statements and management's discussion
and analysis are available on SEDAR at www.sedar.com.

    (1) Non-GAAP Financial Measure

    In addition to providing earnings measures in accordance with Generally
Accepted Accounting Principles (GAAP), WellPoint presents a non-GAAP earnings
measure. This is earnings before interest, taxes, depreciation and
amortization and foreign exchange (Adjusted EBITDA). This measure does not
have any standardized meaning prescribed by GAAP and is therefore unlikely to
be comparable to similar measures presented by other companies. Adjusted
EBITDA is provided to assist investors in determining the ability of WellPoint
to generate cash from operations, to service the interest on indebtedness and
to fund deferred development costs. A reconciliation of Adjusted EBITDA to a
GAAP financial measure is shown below:

    
                                 Three months ended       Nine months ended
                                    September 30            September 30
                                  2007        2006        2007        2006
                                        ($)                     ($)
                              -----------------------------------------------
    Adjusted EBITDA              507,461     515,931   3,266,764   1,497,155
    Add(deduct)
    Foreign exchange gain      1,121,806         802   1,106,268      21,216
    Depreciation and
     amortization               (729,944)   (354,138) (1,614,965)   (903,497)
    Interest                    (607,729)   (147,333)   (974,200)   (436,543)
    Income taxes                 (93,386)     (4,456)   (758,692)     (4,456)

    -------------------------------------------------------------------------
    Net income-GAAP financial
     measure                     198,208      10,806   1,025,175     173,875

    -------------------------------------------------------------------------
    

    About WellPoint Systems Inc.

    WellPoint Systems provides premier software and related services for
managing critical operations within the energy industry. Aligning tightly with
Microsoft Corporation, WellPoint is the only Independent Software Vendor (ISV)
and Microsoft Dynamics partner dedicated to the energy sector. It is breaking
new ground with the creation of a more comprehensive, integrated energy
software suite based on existing Microsoft ERP technology that utilizes
state-of-the-art Dynamics AX(R) and .NET architectures. WellPoint became a
Microsoft Gold Certified Partner in 2005.
    Founded in 1997, Calgary-based WellPoint Systems also has major
operations in Houston, TX, Livingston, NJ, Tampa, FL, Tunis, Tunisia and
Moscow, Russia.
    WellPoint is publicly traded on the TSX Venture Exchange under the symbol
 WPS.

    This document contains forward-looking statements. Some forward looking
statements may be identified by words like "expects", "anticipates", "plans",
"intends", "indicates" or similar expressions. The statements are not a
guarantee of future performance and are inherently subject to risks and
uncertainties. The Company's actual results could differ materially from those
currently anticipated due to a number of factors, including, but not limited
to, successful integration of structural changes, including restructuring
plans, acquisitions, technical or manufacturing or distribution issues, the
competitive environment for the Company's products, the degree of market
penetration of the Company's products, and other factors set forth in reports
and other documents filed by the Company with Canadian securities regulatory
authorities from time to time.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

    %SEDAR: 00013695E




For further information:

For further information: WellPoint Systems Inc., Frank Stanford, Chief
Executive Officer, (403) 538-3604, frank.stanford@wellpointsystems.com,
www.wellpointsystems.com; The Equicom Group Inc., Nick Hurst, Investor
Relations, (403) 538-4845, nhurst@equicomgroup.com, www.equicomgroup.com

Organization Profile

WELLPOINT SYSTEMS INC.

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