Start-up costs for a new facility continued to hurt Youth Services International Inc.'s profits in its second quarter, but revenue jumped by 44 percent and shows signs of continued growth.
The Owings Mills-based company, which operates facilities for troubled juveniles, is seeking new business from Iowa, Arizona and other states, Chairman W. James Hindman told financial analysts in a conference phone call yesterday.
Youth Services now runs 11 programs, including the Charles H. Hickey Jr. School in Baltimore County, serving more than 1,200 people in seven states. Revenue was $12.5 million in its latest quarter.
The company earned $329,000, or 6 cents per share, during the three months ended Dec. 31. That was 33 percent less than profits from the same quarter a year ago, but Youth Services contended that its results were better than they at first appear.
One-time tax benefits inflated the year-ago earnings, for one thing. And normal opening costs for Tarkio Academy in Tarkio, vTC Mo., hurt the latest quarterly results, Youth Services said.
Without last year's tax boost and the Tarkio start-up, Youth Services' profit would have risen by 166 percent, to $820,000, for the quarter and by 148 percent, to $1.07 million, for the six months ended Dec. 31, the company said.
The Tarkio facility is moving toward profitability, filling half its 103-student capacity at year-end, Mr. Hindman said.
Alex Hart, an analyst for Baltimore investment house Ferris, Baker Watts Inc., believes Youth Services' profits will grow.
Ferris, Baker was the managing underwriter in Youth Services' public stock offering last year.
Youth Services' stock closed at $6.25 yesterday, down 12.5 cents. At that price, the stock is "cheap," Mr. Hart said. "I think it overly discounts the company's growth prospects."
L He projects earnings of 40 cents per share this fiscal year.
Mr. Hart expects that states will continue to privatize facilities for juvenile delinquents, offering new opportunities for Youth Services.
The company has been the subject of favorable stories in Forbes magazine and the Wall Street Journal, among other publications.
But "the market wants to see another big contract" like the Hickey job, Mr. Hart said. "The market has very much a show-me attitude."
Youth Services ... ... ... ... Ticker ... ... ... ... Yesterday's
International Inc. ... ... ... Symbol ... ... ... Cls. .... Chg.
Owings Mills
... ... ... ... ... ... ... .. YSII ... ... .. .. 6 1/4 .. .. -
Period ended
Dec. 31 ... ... ... ... ... .. 2nd qtr. ... ... Year ago ... Chg.
Revenue ... ... ... ... ... .. $12,533 .. .. .. $8,705 ... +44.0%
Net Income ... ... ... ... ... $329 ... ... ... $491 .. .. -33.0%
Primary EPS ... ... ... ... .. $0.06 ... ... .. $0.11 .. ..+45.5%
... ... ... ... ... ... ... .. 6 mos. ... ... Year ago ... ... Chg.
Revenue ... ... ... ... ... .. $23,598 ... .. $16,259 ... .. +45.1%
Net Income ... ... .. .. .. .. $643 ... .. .. $699 ... ... .. -8.0%
Primary EPS ... .. ... ... .. $0.12 .. .. .. $0.16 ... ... ... -25%
Figures in thousands (except per share data.)