John H. Harland Co. posted solid first-quarter earnings and said an acquisition last year had partly offset an industrywide slowdown in the use of paper checks.
The Atlanta check printer said Wednesday that its profit rose 24% compared with last year's first quarter, to $21.3 million. Sales climbed 27%, to $273.5 million.
Earnings per share were 78 cents. That was at the top of the company's own estimate range, which it had raised last month, and beat by a penny the average forecast of the two analysts who offer estimates.
"All three of our businesses are performing stronger than we anticipated," said Timothy C. Tuff, Harland's chairman, president, and chief executive, during a conference call with analysts on Thursday.
Besides printing checks, Harland sells financial technology and, through its Scantron division, educational testing equipment.
Sales for the printed-products segment - 75% of which is check printing - grew 23%, to $172.8 million, and the division's income grew 33%, to $32.4 million.
Mr. Tuff attributed much of the growth to Liberty Enterprises Inc., which Harland acquired last June. Excluding Liberty, Harland's check volume fell 2%, Mr. Tuff said, but the company was able to increase check prices by 3% in the first quarter, the first price hike since the fourth quarter of 2003.
"The integration of Liberty continues to go well," Mr. Tuff said, and the company is achieving savings earlier than it had expected.
Income for the software and services unit grew 34%, to $5.6 million, and sales rose 50%, to $71.3 million. Mr. Tuff said that the unit posted 6% organic growth. Sales of core processing and lending software and services increased, especially outsourced core processing, he said, but its mortgage and retail software and services were lower.
The company's Harland Financial Solutions Inc. unit acquired the core processing outsourcer Intrieve Inc. in April of last year.
Software sales were unusually strong in the first quarter, Mr. Tuff said. Such sales are typically stronger toward the end of the year.
Scantron's income grew 24%, to $8 million. Sales increased 5%, to $29.7 million.
Harland said it expects second-quarter earnings of 61 cents to 66 cents a share; the analysts' average estimate is 67 cents. For the year it expects $2.92 to $2.97 a share, slightly more than its April outlook. The analysts' estimate is $2.88.
Charles B. Carden, a senior vice president at Harland and its chief financial officer, said second-quarter growth would be held down by the loss of a major printed-products customer, seasonal slowness in the technology area, salary increases and stock awards that occurred in April, and higher staffing.
Last week Harland's check printing rival, Deluxe Corp. of Shoreview, Minn., reported that first-quarter net income plunged 36% from a year earlier, to $25 million, and said revenue fell 9%, to $411 million.
Both consumers and businesses are shifting away from using paper checks, and instead paying bills online or remitting payment to suppliers electronically, and using payment cards at merchants.
