Questar Assessment, Inc. (formerly Touchstone Applied Science Associates, Inc.) reported a more than a tripling of first quarter fiscal 2007 revenue year over year to $9.6 million, as a result of a $5.9 million revenue contribution from Questar Educational Systems, which the Company acquired in May 2006, and 20% revenue growth at its pre-acquisition businesses. The quarter's
operating loss was $456,000 or $0.09 per share versus a loss of $170,000 or $0.06 per share in the first quarter of fiscal 2006. Incremental amortization expense associated with the intangible assets acquired from Questar reduced earnings by $0.08 per share. Earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled $442,000 or $0.09 per share in the first quarter. On a pro forma basis, the Company's first quarter revenue increased 16% year over year, and EBITDA was up 70%.
We are maintaining our fiscal 2007 estimate of a $0.06 per share diluted loss for Questar. This loss largely is a result of incremental amortization, and the Company's EBITDA outlook remains positive. Therefore, we are maintaining our Buy rating on the Company's shares, which are trading at about 7 times projected fiscal 2007 EBITDA, well trailing-twelve-month EBITDA for 19 other publicly traded companies in the education industry.
Research Report, March 19.