EX-99.2 3 d916076dex992.htm EX-99.2 EX-99.2
First Quarter 2015
Earnings Conference Call
April 28, 2015
NASDAQ: EPIQ
www.epiqsystems.com
Exhibit 99.2

2
Forward Looking Statements
& Use of Non-GAAP Measures
This presentation includes forward-looking statements. These forward-looking statements include, but are not limited to any projection or expectation of earnings, revenue or other financial items; the
plans, strategies and objectives of management for future operations; factors that may affect our operating results; new products or services; the demand for our products and services; our ability to
consummate acquisitions, successfully integrate them into our operations and achieve expected synergies; future capital expenditures; effects of current or future economic conditions or
performance; industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing.  These forward-looking statements are based
on
our
current
expectations.
In
this
press
release,
we
make
statements
that
plan
for
or
anticipate
the
future.
Forward-looking
statements
may
be
identified
by
words
or
phrases
such
as
“believe,”
“expect,”
“anticipate,”
“should,”
“planned,”
“may,”
“estimated,”
“goal,”
“objective,”
“seeks,”
and
“potential”
and
variations
of
these
words
and
similar
expressions
or
negatives
of
these
words.
Section
27A
of
the
Securities
Act
of
1933,
as
amended,
and
Section
21E
of
the
Securities
Exchange
Act
of
1934,
as
amended,
provide
a
“safe
harbor”
for
forward-looking
statements.
Because
forward-
looking
statements
involve
future
risks
and
uncertainties,
listed
below
are
a
variety
of
factors
that
could
cause
actual
results
and
experience
to
differ
materially
from
the
anticipated
results
or
other
expectations
expressed
in
our
forward-looking
statements.
These
factors
include
(1)
failure
to
keep
pace
with
technological
changes
and
significant
changes
in
the
competitive
environment,
(2)
risks
associated with cyber-attacks, interruptions or delays in services at data centers, (3) risks of errors or failures of software or services, (4) interruptions or delays in service at data centers we utilize for
delivery
of
our
services,
(5)
undetected
errors
in,
and
failure
of
operation
of,
software
products
releases,
(6)
our
reliance
on
third-party
hardware
and
software,
(7)
failure
of
our
financial,
operating
and information systems to operate as intended, (8) our inability to attract, develop and retain executives and other qualified employees, (9) risks associated with the integration of acquisitions into
our
existing
business
operations,
(10)
risks
associated
with
our
international
operations,
(11)
lack
of
protection
of
our
intellectual
property
through
patents
and
formal
copyright
registration,
(12)
risks
of
litigation
against
us
for
infringement
of
proprietary
rights,
(13)
material
changes
in
the
number
of
bankruptcy
filings,
class
action
filings
or
mass
tort
actions
each
year,
or
changes
in
government
legislation or court rules affecting these filings, (14) any material non-cash write-downs based on impairment of our goodwill, (15) fluctuations in our quarterly results that could cause fluctuations in
the
market
price
of
our
common
stock,
(16)
our
inability
to
maintain
compliance
with
debt
covenant
ratios,
(17)
risks
associated
with
indebtedness
and
interest
rate
fluctuations,
(18)
risks
associated
with
provisions
of
our
articles
of
incorporation
that
prevent
a
takeover
of
Epiq,
(19)
overall
strength
and
stability
of
general
economic
conditions,
both
in
the
United
States
and
in
the
global
markets,
(20)
the
difficulties
a
third
party
may
have
in
acquiring
our
Company
due
to
our
shareholder
rights
plan,
(21)
the
impact
of
our
current
review
process
of
strategic
alternatives,
(22)
the
successful
fulfillment
or
waiver
of
all
closing
conditions
for
the
acquisition
of
Iris
without
unexpected
delays
or
material
changes,
circumstances,
effects
or
conditions
that
would
constitute
a
material
adverse
effect, and (23) other risks detailed from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K. In addition, there may be other factors not included in our Securities and Exchange Commission filings that may cause actual results to differ materially from any
forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements contained herein to reflect future events or developments, except as required by
law.
This
presentation
includes
the
following
non-GAAP
financial
measures:
(i)
adjusted
net
income
(net
income
adjusted
for
amortization
of
acquisition
intangibles,
share-based
compensation,
acquisition
and
related
expense,
one-time
technology
expense,
loan
fee
amortization,
litigation
expense,
timing
of
recognition
of
expense,
reorganization
expense,
loss
on
disposition
of
assets,
strategic
review
expense
and
the
effect
of
tax
adjustments
that
are
outside
of
Epiq
Systems’
anticipated
effective
tax
rate,
all
net
of
tax),
(ii)
adjusted
earnings
per
share,
calculated
as
adjusted
net
income
on
a
fully
diluted
per
share
basis,
and
(iii)
adjusted
EBITDA
(net
income
(loss)
adjusted
for
depreciation
and
amortization,
share-based
compensation,
acquisition
and
related
expense,
one-
time
technology
expense,
net
expense
related
to
financing,
litigation
expense,
timing
of
recognition
of
expense,
reorganization
expense,
loss
on
disposition
of
assets,
strategic
review
expense
and
provision
for
(benefit
from)
income
taxes).
Income
taxes
typically
represent
a
complex
element
of
a
company’s
income
statement
and
effective
tax
rates
can
vary
widely
between
different
periods. 
Epiq
Systems
uses
an
approximate
statutory
tax
rate
of
40%
to
reflect
income
tax
effects
in
the
presentation
of
its
adjusted
net
income
and
adjusted
net
income
per
share.
Utilization
of
an
approximate
statutory
tax
rate
for
presentation
of
the
non-GAAP
measures
is
done
to
allow
a
consistent
basis
for
investors
to
understand
financial
performance
of
the
company
across
historical
periods.
Although
Epiq
Systems
reports
its
results
using
GAAP,
Epiq
Systems
also
uses
non-GAAP
financial
measures
when
management
believes
those
measures
provide
useful
information
for
its
shareholders.
These
non-GAAP
financial
measures
are
intended
to
supplement
the
GAAP
financial
information
by
providing
additional
insight
regarding
results
of
operations
and
to
allow
a
comparison
with
other
companies,
many
of
whom
use
similar
non-GAAP
financial
measures
to
supplement
their
GAAP
results.
Certain
items
are
excluded
from
these
non-GAAP
financial
measures
to
provide
additional
comparability
measures
from
period
to
period.
These
non-GAAP
financial
measures
will
not
be
defined
in
the
same
manner
by
all
companies
and
may
not
be
comparable
to
other
companies.
These
non-GAAP
financial
measures
are
reconciled
in
the
accompanying
tables
to
the
most
directly
comparable
measures
as
reported
in
accordance
with
GAAP,
and
should
be
viewed
in
addition
to,
and
not
in
lieu
of,
such
comparable
financial
measures.

Q1 2015 Earnings Conference Call
3
(1)  A non-GAAP measure, refer to page 8 for reconciliation to most directly comparable GAAP measure.
(2)  A non-GAAP measure, refer to page 9 for reconciliation to most directly comparable GAAP measure.
(3)  A non-GAAP measure, refer to page 10 for calculation.
Financial Results
(In millions, except share count and
per share data) (Unaudited)
March 31, 2015
March 31, 2014
Operating Revenue
$107.8
$116.2
Net Income (Loss)
$1.7
($2.3)
Net Income (Loss) per share
(Diluted)
$0.05
($0.07)
Adjusted Net Income
(1)
$5.7
$6.8
Adjusted EBITDA
(2)
$21.4
$23.5
Adjusted Earnings Per Share (EPS)
(Diluted)
(3)
$0.15
$0.19
Adjusted Diluted Shares
(in thousands)
36,914
35,415
Net Cash from Operations
$3.8
($0.8)

Q1 2015 Earnings Conference Call
4
(In thousands)
March 31, 2015
(Unaudited)
Dec 31, 2014
Cash and Cash Equivalents
$38,308
$54,226
Trade Accounts Receivable, Net
129,801
117,854
Property and Equipment, Net
70,217
70,579
Goodwill
403,990
404,187
Other Intangibles, Net
26,919
29,605
Indebtedness
311,034
313,481
Equity
324,007
324,937
Selected Balance Sheet Data

Q1 2015 Earnings Conference Call
5
(In thousands) (Unaudited)
March 31, 2015
March 31,  2014                           
Net Income (Loss)
$1,733
($2,298)
Non-cash Adjustments to Net Income (Loss)
Depreciation and Amortization
11,450
11,820
Other, Net
2,662
5,688
Changes in Operating Assets and Liabilities, Net
Trade Accounts Receivable
(13,349)
3,093
Other, Net
1,328
(19,134)
Net Cash Provided by (Used in) Operating
Activities
$3,824
($831)
Cash from Operating Activities

Q1 2015 Earnings Conference Call
6
Segment Operating Results
Technology                                    
Bankruptcy & Settlement Administration
(In millions)
Technology
Bankruptcy and
Settlement Administration
Operating
Revenue
Adjusted
EBITDA
Operating
Revenue
Adjusted
EBITDA
Q1 2015
$70.0
$18.2
$37.7
$12.7
Q1 2014
$81.2
$22.3
$35.1
$12.0

2015 Financial Guidance
•
Updated guidance estimates for fiscal year 2015, which include the Iris acquisition
•
Guidance
estimates
may
be
updated
in
future
periods
as
conditions
permit
(1)
2015E
Operating Revenue
$500 -
$520 million
Adjusted EBITDA
$109 -
$115 million
Adjusted EPS
$0.90 -
$0.96
(1)
This guidance includes a number of assumptions based on current facts and expectations, which are subject to change.
Q1 2015 Earnings Conference Call
7

Q1 2015 Earnings Conference Call
8
(In thousands, except per share data) (Unaudited)
Q1 2015
Q1 2014
Net Income (Loss)      
$1,733
($2,298)
Plus (net of tax
(1)
):
Amortization of Acquisition Intangibles
1,611
1,872
Share-based Compensation
973
2,124
Acquisition and Related Expense
(2)
146
986
One-time Technology Expense
(3)
-
1,268
Loan Fee Amortization and Write-off
362
681
Litigation (Recovery) Expense, Net
(4)
(172)
209
Timing of Recognition of Expense
(5)
(174)
-
Reorganization Expense
(6)
709
1,593
Loss on Disposition of Assets
11
-
Strategic Review Expense
628
-
Effective Tax Rate Adjustment
(7)
(162)
350
Adjusted Net Income
$5,665
$6,785
Adjusted
Earnings
Per
Share
–
Diluted
$0.15
$0.19
(1)
Individual adjustments are calculated using a tax rate of 40%.
(2)
Acquisition and related expense includes one-time costs associated with acquisitions.
(3)
One-time technology related costs associated with security and consolidation of data centers from acquisitions.
(4)
Litigation expense and recovery related to significant one-time matters.
(5)
Adjustment to match timing of expenses to be consistent with timing of GAAP revenue and recoveries for settlement
administration matters.
(6)
Expenses primarily related to one-time charges for post-employment benefits.
(7)
The effective tax rate adjustment reflects a non-GAAP provision for income taxes at a tax rate of 40%.
Adjusted Net Income
Reconciliation

Q1 2015 Earnings Conference Call
9
(In thousands) (Unaudited)
Q1 2015
Q1 2014
Net Income (Loss)
$1,733
($2,298)
Plus:
Depreciation and Amortization
11,450
11,820
Share-based Compensation
1,621
3,539
Acquisition and Related Expense
(1)
203
1,589
One-time Technology Expense
(2)
-
2,113
Expense Related to Financing, Net
(3)
4,111
4,870
Litigation (Recovery) Expense, Net
(4)
(520)
112
Timing of Recognition of Expense
(5)
(290) 
-
Reorganization Expense
(6)
1,182
2,655
Loss on Disposition of Assets
18
-
Strategic Review Expense
1,047
-
Provision for (Benefit from) Income Taxes
886
(949)
Adjusted EBITDA
$21,441
$23,451
(1)
Acquisition and related expense includes one-time costs associated with acquisitions.
(2)
One-time technology related costs associated with security and consolidation of data centers from acquisitions.
(3)
Expense related to financing is net of interest income.
(4)
Litigation expense and recovery related to significant one-time matters.
(5)
Adjustment to match timing of expenses to be consistent with timing of GAAP revenue and recoveries for settlement
administration matters.
(6)
Expenses primarily related to one-time charges for post-employment benefits.
Adjusted EBITDA
Reconciliation

Q1 2015 Earnings Conference Call
10
(In thousands, except per share data) (Unaudited)
Q1 2015
Q1 2014
Net Income (Loss)
$1,733
($2,298)
Basic Weighted Average Shares
36,281
34,862
Adjustment to reflect share-based awards
633
553
Diluted Weighted Average Shares(1)
36,914
35,415
Net
Income
(Loss)
Per
Share
–
Diluted
$0.05
($0.07)
Adjusted Net Income
$5,665
$6,785
Adjusted
Earnings
Per
Share
–
Diluted
$0.15
$0.19
(1)
Diluted weighted average shares outstanding for the three months ended March 31, 2014 exclude the dilutive impact of
options and nonvested shares outstanding due to the GAAP net loss reported for the first quarter of 2014.
Diluted Net Income (Loss) Per Share Calculation

Investor Contacts
Kelly Bailey
Epiq Systems
(913) 621-9500
IR@epiqsystems.com
Chris Eddy
Catalyst Global
(212) 924-9800
epiq@catalyst-ir.com
NASDAQ: EPIQ
www.epiqsystems.com