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Exhibit 99.1

 

LOGO

Tyler Technologies Reports Earnings

for First Quarter 2014

Net income up 40.0 percent as revenues rise 17.6 percent

PLANO, Texas – April 23, 2014 – Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the first quarter ended March 31, 2014.

First Quarter Financial Highlights:

 

    Total revenue was $112.6 million in the first quarter of 2014, up 17.6 percent from $95.8 million in the first quarter of 2013.

 

    Recurring software revenue from maintenance and subscriptions was $70.7 million for the quarter, an increase of 18.9 percent compared to the first quarter of 2013, and comprised 62.8 percent of first quarter 2014 revenue.

 

    Royalty revenue from Microsoft Dynamics® AX, which is included in software licenses and royalties, was $659,000 compared to $891,000 for the first quarter of 2013.

 

    Operating income for the quarter was $19.9 million, an increase of 37.3 percent from the first quarter of 2013.

 

    Net income for the quarter was $11.9 million, or $0.33 per diluted share, up 40.0 percent compared to $8.5 million, or $0.25 per diluted share, for the first quarter of 2013.

 

    Cash flow from operations for the quarter was $16.6 million, compared to $17.1 million for the first quarter of 2013.

 

    Non-GAAP operating income for the quarter was $25.0 million, up 33.3 percent from $18.7 million for the first quarter of 2013.

 

    Adjusted EBITDA for the quarter was $26.9 million, up 32.7 percent compared to $20.2 million for the first quarter of 2013.

 

    Non-GAAP net income for the quarter was $15.4 million, or $0.43 per diluted share, up 34.6 percent compared to $11.5 million, or $0.34 per diluted share, for the first quarter of 2013.

 

    Total backlog was $540.3 million at March 31, 2014, up 39.8 percent from $386.6 million at March 31, 2013. Software-related backlog (excluding appraisal services) was $508.8 million, an increase of 41.0 percent compared to $360.9 million at March 31, 2013.

“We followed our solid performance in 2013 with very strong results in the first quarter of 2014,” said John S. Marr Jr., Tyler’s president and chief executive officer. “Revenues grew organically by almost 18 percent, with software license revenues up more than 27 percent. Subscription revenues increased 52 percent over last year as e-filing revenues more than tripled, with the increase driven by our statewide e-filing contract in Texas. The growth in software license and subscription revenues contributed to margin expansion, as we achieved non-GAAP gross margin expansion of 80 basis points. In addition, leverage from SG&A and R&D expenses, which grew at substantially lower rates than revenues, enabled us to drive our non-GAAP operating margin up 270 basis points to 22.2 percent.

 

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Tyler Technologies Reports Earnings

for First Quarter 2014

April 23, 2014

Page 2

 

“While bookings for the quarter were essentially flat with the first quarter of last year, last year’s first quarter bookings included an unusually high number of multi-year SaaS contract renewals. For the trailing 12 months our bookings are up approximately 36 percent. Entering the second quarter, our pipeline of new-business opportunities, including a significant number of unsigned awards, is at an all-time high. Our competitive position across our product lines remains extremely strong and our win rates continue to improve. Our outlook for the balance of 2014 is positive, and our revenues and earnings guidance for the year has been revised upward to reflect that outlook.

“Most important, we continue to execute at a very high-level operationally, delivering quality solutions and services to all our clients. We look forward to building on that success while creating meaningful returns for our clients, shareholders and employees, and investing in opportunities for future growth,” continued Mr. Marr.

Guidance for 2014

As of April 23, 2014, Tyler Technologies is providing the following guidance for the full year 2014:

 

    Total revenues are expected to be in the range of $470 million to $478 million.

 

    Diluted earnings per share are expected to be approximately $1.39 to $1.46.

 

    Non-GAAP diluted earnings per share are expected to be approximately $1.83 to $1.90.

 

    Pretax non-cash, share-based compensation expense is expected to be approximately $15.0 million.

 

    The effective tax rate is expected to be between approximately 39.0 percent and 41.0 percent.

 

    Capital expenditures are expected to be between $12.0 million and $13.0 million, and total depreciation and amortization expense is expected to be between $15.0 million and $15.5 million, including approximately $6.5 million of amortization of acquisition intangibles.

Conference Call

Tyler Technologies will hold a conference call on Thursday, April 24, at 10:00 a.m. ET to discuss the company’s results. The company is offering participants the opportunity to register in advance for the conference through the following link: http://dpregister.com/10043689. Registered participants will receive an email with a calendar reminder and a dial-in number and PIN that will allow them immediate access to the call.

Participants who do not wish to pre-register for the call may dial in using 877-270-2148 (U.S. callers) or 412-902-6510 (international callers), and ask for the “Tyler Technologies” call. A replay will be available two hours after completion of the call through May 1, 2014. To access the replay, please dial 877-344-7529 (U.S. callers) or 412-317-0088 (international callers) and reference passcode 10043689.

The live webcast and archived replay can also be accessed at www.tylertech.com.

 

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Tyler Technologies Reports Earnings

for First Quarter 2014

April 23, 2014

Page 3

 

About Tyler Technologies, Inc.

Tyler Technologies (NYSE: TYL) is a leading provider of end-to-end information management solutions and services for local governments. Tyler partners with clients to empower the public sector — cities, counties, schools and other government entities — to become more efficient, more accessible and more responsive to the needs of citizens. Tyler’s client base includes more than 11,000 local government offices in all 50 states, Canada, the Caribbean, the United Kingdom and other international locations. Forbes named Tyler one of “America’s Best Small Companies” seven times and the company has been included four times on the Barron’s 400 Index, a measure of the most promising companies in America. More information about Plano-based Tyler Technologies can be found at www.tylertech.com.

Non-GAAP Financial Measures

Tyler Technologies has provided in this press release financial measures that have not been prepared in accordance with generally accepted accounting principles (GAAP) and are therefore considered non-GAAP financial measures. This information includes non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share, EBITDA and adjusted EBITDA. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating Tyler’s ongoing operational performance. Tyler believes the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures discussed above exclude share-based compensation expense, employer portion of payroll taxes on employee stock transactions, and expenses associated with amortization of intangibles arising from business combinations. We use these measures and believe they are useful to investors because they provide additional insight in comparing results from period to period.

Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial information prepared in accordance with GAAP. The non-GAAP measures used by Tyler Technologies may be different from non-GAAP measures used by other companies. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which has been provided in the financial statement tables included below in this press release.

Forward-looking Statements

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following

 

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Tyler Technologies Reports Earnings

for First Quarter 2014

April 23, 2014

Page 4

 

to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our customers, primarily local and state governments, that could negatively impact information technology spending; (2) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (3) material portions of our business require the Internet infrastructure to be adequately maintained; (4) our ability to achieve our financial forecasts due to various factors, including project delays by our customers, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (5) general economic, political and market conditions; (6) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (7) our ability to successfully complete acquisitions and achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (8) competition in the industry in which we conduct business and the impact of competition on pricing, customer retention and pressure for new products or services; (9) the ability to attract and retain qualified personnel and dealing with the loss or retirement of key members of management or other key personnel; and (10) costs of compliance and any failure to comply with government and stock exchange regulations. A detailed discussion of these factors and other risks that affect our business are described in our filings with the Securities and Exchange Commission, including the detailed “Risk Factors” contained in our most recent annual report on Form 10-K. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.

###

(Comparative results follow)

Contact: Brian K. Miller

Executive Vice President - CFO

Tyler Technologies, Inc.

(972) 713-3720

brian.miller@tylertech.com

14-25

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months Ended March 31,  
     2014      2013  

Revenues:

     

Software licenses and royalties

   $ 11,232       $ 8,830   

Subscriptions

     20,507         13,473   

Software services

     24,307         20,461   

Maintenance

     50,240         46,050   

Appraisal services

     4,851         5,591   

Hardware and other

     1,489         1,394   
  

 

 

    

 

 

 

Total revenues

     112,626         95,799   

Cost of revenues:

     

Software licenses and royalties

     531         426   

Acquired software

     481         549   

Software services, maintenance and subscriptions

     54,999         46,382   

Appraisal services

     3,311         3,799   

Hardware and other

     774         798   
  

 

 

    

 

 

 

Total cost of revenues

     60,096         51,954   

Gross profit

     52,530         43,845   

Selling, general and administrative expenses

     25,367         22,646   

Research and development expense

     6,172         5,598   

Amortization of customer and trade name intangibles

     1,129         1,131   
  

 

 

    

 

 

 

Operating income

     19,862         14,470   

Other expense, net

     259         338   
  

 

 

    

 

 

 

Income before income taxes

     19,603         14,132   

Income tax provision

     7,720         5,639   
  

 

 

    

 

 

 

Net income

   $ 11,883       $ 8,493   
  

 

 

    

 

 

 

Earnings per common share:

     

Basic

   $ 0.36       $ 0.27   
  

 

 

    

 

 

 

Diluted

   $ 0.33       $ 0.25   
  

 

 

    

 

 

 

Weighted average common shares outstanding:

     

Basic

     32,916         31,403   

Diluted

     35,500         33,948   


TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months Ended March 31,  
     2014     2013  

Reconciliation of non-GAAP gross profit and margin

    

GAAP gross profit

   $ 52,530      $ 43,845   

Non-GAAP adjustments:

    

Add: Share-based compensation expense included in cost of revenues

     513        336   

Add: Amortization of acquired software

     481        549   
  

 

 

   

 

 

 

Non-GAAP gross profit

   $ 53,524      $ 44,730   
  

 

 

   

 

 

 

Non-GAAP gross margin

     47.5     46.7
  

 

 

   

 

 

 

Reconciliation of non-GAAP operating income and margin

    

GAAP operating income

   $ 19,862      $ 14,470   

Non-GAAP adjustments:

    

Add: Share-based compensation expense

     3,462        2,575   

Add: Employer portion of payroll tax related to employee stock transactions

     24        —     

Add: Amortization of acquired software

     481        549   

Add: Amortization of customer and trade name intangibles

     1,129        1,131   
  

 

 

   

 

 

 

Non-GAAP adjustments subtotal

   $ 5,096      $ 4,255   
  

 

 

   

 

 

 

Non-GAAP operating income

   $ 24,958      $ 18,725   
  

 

 

   

 

 

 

Non-GAAP operating margin

     22.2     19.5
  

 

 

   

 

 

 

Reconciliation of non-GAAP net income and earnings per share

    

GAAP net income

   $ 11,883      $ 8,493   

Non-GAAP adjustments:

    

Add: Total non-GAAP adjustments to operating income

     5,096        4,255   

Less: Tax impact related to non-GAAP adjustments

     (1,540     (1,279
  

 

 

   

 

 

 

Non-GAAP net income

   $ 15,439      $ 11,469   
  

 

 

   

 

 

 

Non-GAAP earnings per diluted share

   $ 0.43      $ 0.34   
  

 

 

   

 

 

 

Detail of share-based compensation expense

    

Cost of software services, maintenance and subscriptions

   $ 513      $ 336   

Selling, general and administrative expenses

     2,949        2,239   
  

 

 

   

 

 

 

Total share-based compensation expense

   $ 3,462      $ 2,575   
  

 

 

   

 

 

 

Reconciliation of adjusted EBITDA

    

GAAP net income

   $ 11,883      $ 8,493   

Amortization of customer and trade name intangibles

     1,129        1,131   

Depreciation and other amortization included in cost of revenues, SG&A and other expenses

     2,527        2,191   

Interest expense included in other expense, net

     143        210   

Income tax provision

     7,720        5,639   
  

 

 

   

 

 

 

EBITDA

   $ 23,402      $ 17,664   
  

 

 

   

 

 

 

Share-based compensation expense

     3,462        2,575   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 26,864      $ 20,239   
  

 

 

   

 

 

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

     March 31,      December 31,  
     2014      2013  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 97,145       $ 78,876   

Accounts receivable, net

     82,334         106,570   

Other current assets

     20,381         24,030   

Deferred income taxes

     7,759         7,759   
  

 

 

    

 

 

 

Total current assets

     207,619         217,235   

Accounts receivable, long-term portion

     526         588   

Property and equipment, net

     66,222         64,844   

Non-current investments available-for-sale

     1,280         1,288   

Other assets:

     

Goodwill and other intangibles, net

     158,387         159,997   

Other

     207         536   
  

 

 

    

 

 

 

Total assets

   $ 434,241       $ 444,488   
  

 

 

    

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable and accrued liabilities

   $ 22,084       $ 35,372   

Deferred revenue

     139,298         156,738   
  

 

 

    

 

 

 

Total current liabilities

     161,382         192,110   

Deferred income taxes

     6,155         6,059   

Shareholders’ equity

     266,704         246,319   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 434,241       $ 444,488   
  

 

 

    

 

 

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

     Three months ended March 31,  
     2014     2013  

Cash flows from operating activities:

    

Net income

   $ 11,883      $ 8,493   

Adjustments to reconcile net income to cash provided by operations:

    

Depreciation and amortization

     3,656        3,322   

Share-based compensation expense

     3,462        2,575   

Excess tax benefit from exercise of share-based arrangements

     (2,158     (1,523

Changes in operating assets and liabilities

     (283     4,217   
  

 

 

   

 

 

 

Net cash provided by operating activities

     16,560        17,084   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Proceeds from sales of investments

     8        25   

Additions to property and equipment

     (3,630     (5,089

Decrease in other

     300        239   
  

 

 

   

 

 

 

Net cash used by investing activities

     (3,322     (4,825
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Decrease in net borrowings on revolving line of credit

     —          (18,000

Contributions from employee stock purchase plan

     849        670   

Proceeds from exercise of stock options

     2,024        1,637   

Excess tax benefit from exercise of share-based arrangements

     2,158        1,523   
  

 

 

   

 

 

 

Net cash provided (used) by financing activities

     5,031        (14,170
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     18,269        (1,911

Cash and cash equivalents at beginning of period

     78,876        6,406   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 97,145      $ 4,495