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The Dolan Company, parent of The Daily Record, saw a decrease in both profit and revenue in the first quarter of 2012, compared to the corresponding time last year.
The company on Tuesday reported net income attributable to The Dolan Company of $169,000 for the quarter, or 1 cent per share, a 95 percent decrease from $3.5 million, or 12 cents per share, earned in the first quarter of 2011.
Analysts polled by Thomson Reuters had been expecting quarterly earnings of zero cents per share.
“They have more debt than they did last year, and that’s due to the acquisition that they made of ACT [Litigation Services],” said Jason Ursaner, a managing partner with White Plains, N.Y.-based CJS Securities. “That’s been pretty positive. It’s built out their e-discovery business.”
Minneapolis-based Dolan reported revenue of $66.7 million, down 7 percent from $71.8 million in the corresponding quarter in 2011. Analysts polled by Thomson Reuters had been expecting revenue of $67.6 million.
The decrease in revenue was largely driven by the slow pace of foreclosures, according to James P. Dolan, chairman, president and CEO of the company.
“As expected, our first-quarter results were challenging,” Dolan said on a conference call. “We continued to see softness in our mortgage default processing operations and our e-discovery business experienced some softness due to timing of matters. The pace of foreclosures referrals from mortgage servicers remained slow.”
Dolan said he is optimistic, however, that the backlog of mortgage foreclosures will begin to move in the second half of the year. The company expects second quarter revenue to be “modestly higher” and the second half of the year to be stronger than the first half.
The company lowered its forecast for 2012, noting that it is difficult to predict when the volume of foreclosure processing will increase.
In March, Dolan expected 2012 revenues in the $301 million to $318 million range, but has lowered its guidance to $290 million to $300 million. The company had also projected net income per share to be between 38 and 50 cents, but lowered that forecast to between 26 and 42 cents per share.
Dolan has two divisions, business information and professional services. The business information division has nearly 60 publications of mainly business and legal newspapers in 21 markets. That division saw revenue of $18.8 million, a 5 percent decrease from the first quarter of 2011. The quarter’s decline in mortgage default-related business hurt the business information services division, which relies on revenue from public notice advertisements.
Operating expenses in the division, however, decreased 12.5 percent from the corresponding quarter last year.
The company’s professional services division, which provides specialized services to the legal profession through subsidiaries NDeX, Counsel Press and DiscoverReady, saw revenue of $47.9 million, an 8 percent decrease from the corresponding quarter in 2011.
Litigation support services grew by 30 percent and contributed $18.4 million of the professional services revenue. The electronic discovery business grew by more than 40 percent compared to the corresponding quarter last year, with the increase largely driven by Dolan’s acquisition of ACT Litigation Services in July.
Dolan released its earnings report prior to the opening of the market Tuesday. Shares of Dolan’s stock were unchanged Tuesday, closing at $7.07 on the New York Stock Exchange.
