July 24--Investments ballooned second quarter profits by 75 percent at DST Systems Inc., the Kansas City-based company said Thursday.
DST earned $137.8 million, or $3.34 a share, in April, May and June, compared with $78.5 million, or $1.77 a share, a year ago.
Earnings benefited in part from $118.5 million in cash proceeds from investments unrelated to the company's financial services and other businesses. For example, a $103.6 million gain, before taxes, came from selling DST's remaining stake in a private company, which the announcement did not name.
David Koning, an analyst at Robert W. Baird & Co., said in a note to clients it likely was DST's remaining shares of Asurion Corp.
The gain wraps up one of the most successful investment deals DST has managed. It gained a 37.4 percent stake in Asurion by agreeing in 2006 to merge its subsidiary called lock\line LLC into the Tennessee-based warranty management company.
The next year, DST had sold all but 6 percent of the Tennessee-based warranty management company and collected more than $1 billion. In 2012, it sold another piece of a company, which again analysts said was Asurion, to post an additional $138.7 million gain before taxes.
Chief executive Steve Hooley declined to say during a call with analysts whether it was Asurion, but he said the sale was the last of DST's ownership in the company.
Ignoring these and other one-time impacts on earnings, DST earned $49.5 million in the quarter, compared with a similarly adjusted $46.3 million profit a year earlier.
This increase reflected higher revenues in DST's financial services business and health care processing services business. Total revenues were $679.5 million, compared with $657.1 million a year ago.
Income from the health care business was hurt by "an incremental $5.7 million" liability stemming from "processing errors involving certain pharmacy claim transactions when a specific set of circumstances were present," DST's announcement said.
During call with analysts, Hooley said the size of the error was unusual.
"We have processing errors from time to time, that's the nature of the business we're in. This one was certainly larger than most we experience," he said.
DST shares were up 90 cents, or nearly 1 percent, at $92.65 in mid-day trading.
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