California-based PAULA Financial has reported net income for the second quarter of 2005 of $273,000 or $0.04 per share compared to $215,000 or $0.03 per share for the 2004 period. For the six months ended June 30, 2005, the company reported net income of $934,000 or $0.14 per share compared to $773,000 or $0.11 per share for the 2004 period.
Total revenue for the second quarter of 2005 was $4.1 million compared to $4.7 million for the 2004 period. Total revenue for the six months ended June 30, 2005 was $9.8 million, consistent with the comparable 2004 period.
“Net income for the quarter was up 27% over the second quarter of 2004. Year to date income is up 21% over the comparable 2004 period,” commented Jeff Snider, chairman and CEO. “The company is demonstrating a unique capability to expand earnings as the industry begins to segue into a softening market cycle. Shareholders are beginning to see the evidence of the steps the company initiated over the past eighteen months to restructure executive compensation, to aggressively cull underperforming sales units and their associated expenses, while it continues to recruit new sales personnel. Additions to the sales team are up 10% over 2004 even as net operating expenses continue to decline.
“We are actively reducing our dependency on the State Compensation Insurance Fund (“SCIF”) for workers’ compensation placements. In addition to achieving broader market diversification, we are achieving improvements in average commission on workers’ compensation sales as well. By the end of 2005, we expect to have reduced our inventories with SCIF by 50% over 2004 levels.
“We believe the second quarter performance is sustainable. Margin improvement, new sales and a continued focus on M&A opportunities should reinforce the momentum of the company’s 2005 earnings performance. Cash accumulations are strong, thereby providing very adequate coverage for the dividend and sufficient internal resources to act upon suitable accretive acquisitions,” Snider concluded.
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