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| 8-K - NIC INC. 8-K - NIC INC | a51549074.htm |
Exhibit 99.1
NIC Earns 21 Cents Per Share on Total Revenues of $83.2 Million
Company Secures Several Contract Renewals and Rebids During the Quarter
OLATHE, Kan.--(BUSINESS WIRE)--May 1, 2017--NIC Inc. (NASDAQ: EGOV), the dominant provider of digital government services, today announced net income of $14.0 million and earnings per share of 21 cents on total revenues of $83.2 million for the three months ended March 31, 2017. In the first quarter of 2016, the Company reported net income of $12.9 million and earnings per share of 19 cents on total revenues of $78.4 million.
The Company’s effective tax rate in the current quarter was 34 percent, down from 37 percent in the prior year quarter. The lower effective rate was partly attributable to favorable benefits related to the domestic production activities deduction, which the Company began recognizing in the third quarter of 2016. In addition, the lower rate reflects the Company’s adoption of a new accounting rule which simplifies several aspects of accounting for stock-based compensation, including the related impact of income taxes. With the adoption of the new rule, excess tax benefits generated when restricted stock awards vest are now recognized as a reduction to the provision for income taxes. Previously the Company recognized such excess tax benefits in additional paid-in capital in the consolidated balance sheet. This resulted in a $0.5 million reduction in the Company’s first quarter 2017 income-tax provision, increasing earnings per share for the current quarter by approximately 1 cent.
Quarterly portal revenues were a record $77.2 million, a 5 percent increase over the first quarter of 2016. On a same-state basis, portal revenues were $73.8 million in the current quarter, a 5 percent increase over the first quarter of 2016. Same-state, transaction-based revenues from Interactive Government Services (IGS) rose 10 percent over the first quarter of 2016, due primarily to higher volumes from a variety of services including motor vehicle inspections and registrations, property tax filings, and business filings, among others. Same-state, transaction-based revenues from Driver History Records (DHR) were up 1 percent due mainly to higher transaction volumes in several states. Same-state portal software development revenues decreased 31 percent, as the Company cycled against a strong prior year quarter of project-based, time and materials revenues in a few states.
First quarter 2017 revenues from Louisiana, the Company’s newest portal, totaled $1.6 million, compared to $0.2 million in the prior year quarter. In addition, revenues from the Tennessee portal contract totaled $1.8 million in the first quarter of 2017 compared to $2.3 million in the prior year quarter, while revenues from the Iowa portal contract totaled $0.5 million in the prior year quarter. As previously announced, the Company’s contract with the state of Tennessee expired on March 31, 2017, and the Company’s contract with the state of Iowa expired on November 30, 2016.
Software & services revenues were $6.0 million in the current quarter, up 15 percent from the first quarter of 2016, driven by an increase in transactional revenues from the federal Pre-employment Screening Program and other payment processing services.
Quarterly operating income increased 4 percent to $21.1 million, contributing to an operating income margin of 25 percent for the current quarter, compared to 26 percent in the prior year quarter.
“I am pleased with our solid financial results for the quarter,” said Harry Herington, NIC’s Chief Executive Officer and Chairman of the Board. “Our teams across the country remain laser-focused on our mission to bring new innovative solutions to our government partners, which continue to deliver more efficiencies to citizens and businesses.”
Operational Highlights
During the quarter, several NIC subsidiaries received contract extensions or were awarded new contracts based on a competitive contract rebid process. The Company’s subsidiary, Alabama Interactive, LLC was awarded a new five-year contract following a competitive rebid. The contract includes a three-year base term plus two, one-year renewal options the state of Alabama may exercise taking the agreement through March 2022. In addition, Idaho Interactive, LLC received a one-year contract extension from the state of Idaho taking its contract through June 2018; the Company’s LiensNC service managed under NIC Services, LLC received a two-year contract renewal, extending the contract to provide mandatory lien registrations in the state of North Carolina through April 2019; and Oklahoma Interactive, LLC received a one-year renewal from the state of Oklahoma extending its contract through March 2018.
First Quarter Earnings Call and Webcast Details
On the May 1, 2017 call, the Company will discuss its 2017 first quarter financial and operational results, and answer questions from the investment community. The call may also include discussion of Company developments, and forward-looking and other material information about business and financial matters.
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Dial-In Information |
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| Monday, May 1,2017 | ||
| 4:30 p.m. (EDT) | ||
| Call bridge: | 888-500-6950 (U.S. callers) or 719-325-2329 (international callers) | |
| Conference ID: | 6858509 | |
| Call leaders: | Harry Herington, Chief Executive Officer and Chairman of the Board | |
| Steve Kovzan, Chief Financial Officer | ||
| Robert Knapp, Chief Operating Officer | ||
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Webcast Information |
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To sign in and listen: The Webcast system is available at https://www.egov.com/investor-relations. |
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A replay of the Webcast will be available by visiting https://www.egov.com/investor-relations. |
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About NIC
Founded in 1992, NIC Inc. (NASDAQ: EGOV) is celebrating 25 years as the nation’s premier provider of innovative digital government solutions and secure payment processing, which help make government interactions more accessible for everyone through technology. The family of NIC companies has developed a library of more than 13,000 digital government services for more than 5,500 federal, state, and local government agencies. Among these solutions is the ground-breaking digital government personal assistant, Gov2Go, delivering citizens personalized reminders and a single access point for government interactions. More information is available at www.egov.com.
Cautionary Statement Regarding Forward-Looking Information
Any statements made in this release that do not relate to historical or current facts constitute forward-looking statements. These statements include estimates, projections, the expected length of contract terms, statements relating to the Company’s business plans, objectives and expected operating results, statements relating to possible future dividends, and the assumptions upon which those statements are based. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements, including regional or national business, political, economic, competitive, social and market conditions, including various termination rights of the Company and its partners, the ability of the Company to renew existing contracts, and to sign contracts with new states and federal government agencies, as well as possible data security incidents. You should not rely on any forward-looking statement as a prediction or guarantee about the future. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the sections titled “Risk Factors” and “Caution About Forward-Looking Statements” of the Company’s most recent Forms 10-K and 10-Q filed with the SEC. These filings are available at the SEC's web site at www.sec.gov. Any forward-looking statements made in this release speak only as of the date of this release. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
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NIC INC. |
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| Three months ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenues: | ||||||||
| Portal revenues | $ | 77,198 | $ | 73,197 | ||||
| Software & services revenues | 5,979 | 5,193 | ||||||
| Total revenues | 83,177 | 78,390 | ||||||
| Operating expenses: | ||||||||
| Cost of portal revenues, exclusive of depreciation & amortization | 47,032 | 43,615 | ||||||
| Cost of software & services revenues, exclusive of depreciation & | ||||||||
| amortization | 1,763 | 1,413 | ||||||
| Selling & administrative | 11,660 | 11,342 | ||||||
| Depreciation & amortization | 1,613 | 1,664 | ||||||
| Total operating expenses | 62,068 | 58,034 | ||||||
| Operating income before income taxes | 21,109 | 20,356 | ||||||
| Income tax provision | 7,124 | 7,462 | ||||||
| Net income | $ | 13,985 | $ | 12,894 | ||||
| Basic net income per share | $ | 0.21 | $ | 0.19 | ||||
| Diluted net income per share | $ | 0.21 | $ | 0.19 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 66,046 | 65,739 | ||||||
| Diluted | 66,046 | 65,739 | ||||||
| Key Financial Metrics: | ||||||||
| Revenue growth - outsourced portals | 5 | % | 11 | % | ||||
| Same state revenue growth - outsourced portals | 5 | % | 12 | % | ||||
| Recurring portal revenue as a % of total portal revenues | 98 | % | 96 | % | ||||
| Gross profit % - outsourced portals | 39 | % | 40 | % | ||||
| Revenue growth - software & services | 15 | % | 17 | % | ||||
| Gross profit % - software & services | 71 | % | 73 | % | ||||
| Selling & administrative expenses as a % of total revenues | 14 | % | 14 | % | ||||
| Operating income as a % of total revenue | 25 | % | 26 | % | ||||
| Portal Revenue Analysis: | ||||||||
| IGS | $ | 45,925 | $ | 41,933 | ||||
| DHR | 28,169 | 27,126 | ||||||
| Portal software development | 1,829 | 2,863 | ||||||
| Portal management | 1,275 | 1,275 | ||||||
| Total portal revenues | $ | 77,198 | $ | 73,197 | ||||
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NIC INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) Thousands except par value amount |
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| March 31, 2017 | December 31, 2016 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash | $ | 123,561 | $ | 127,009 | ||
| Trade accounts receivable, net | 83,842 | 82,722 | ||||
| Prepaid expenses & other current assets | 12,572 | 15,033 | ||||
| Total current assets | 219,975 | 224,764 | ||||
| Property and equipment, net | 9,571 | 9,726 | ||||
| Intangible assets, net | 4,104 | 3,588 | ||||
| Deferred income taxes, net | 1,395 | 2,307 | ||||
| Other assets | 1,970 | 477 | ||||
| Total assets | $ | 237,015 | $ | 240,862 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 63,463 | $ | 73,252 | ||
| Accrued expenses | 19,733 | 23,395 | ||||
| Other current liabilities | 3,298 | 3,150 | ||||
| Total current liabilities | 86,494 | 99,797 | ||||
| Other long-term liabilities | 7,745 | 7,162 | ||||
| Total liabilities | 94,239 | 106,959 | ||||
| Commitments and contingencies | - | - | ||||
| Stockholders' equity: | ||||||
| Common stock, $0.0001 par, 200,000 shares authorized, | ||||||
| 66,218 and 65,982 shares issued and outstanding | 7 | 7 | ||||
| Additional paid-in capital | 107,304 | 106,669 | ||||
| Retained earnings | 35,465 | 27,227 | ||||
| Total stockholders' equity | 142,776 | 133,903 | ||||
| Total liabilities and stockholders' equity | $ | 237,015 | $ | 240,862 | ||
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NIC INC. |
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| Additional | ||||||||||||||||||
| Common Stock | Paid-in | |||||||||||||||||
| Shares | Amount | Capital | Retained Earnings | Total | ||||||||||||||
| Balance, January 1, 2017 (previously reported) | 65,982 | $ | 7 | $ | 106,669 | $ | 27,227 | $ | 133,903 | |||||||||
| Cumulative effect of adoption of new | ||||||||||||||||||
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accounting standard |
- | - | 409 | (409 | ) | - | ||||||||||||
| Balance, January 1, 2017 (as adjusted) | 65,982 | 7 | 107,078 | 26,818 | 133,903 | |||||||||||||
| Net income | - | - | - | 13,985 | 13,985 | |||||||||||||
| Restricted stock vestings | 270 | - | 107 | - | 107 | |||||||||||||
| Dividends declared | - | - | - | (5,342 | ) | (5,342 | ) | |||||||||||
| Dividend equivalents on performance-based restricted | ||||||||||||||||||
| stock awards | - | - | - | (27 | ) | (27 | ) | |||||||||||
| Dividend equivalents cancelled upon forfeiture of | ||||||||||||||||||
| performance-based restricted stock awards | - | - | - | 31 | 31 | |||||||||||||
| Shares issuable in lieu of dividend payments on unvested | ||||||||||||||||||
| performance-based restricted stock awards | - | - | (111 | ) | - | (111 | ) | |||||||||||
| Shares surrendered and cancelled upon vesting of restricted | ||||||||||||||||||
| stock to satisfy tax withholdings | (121 | ) | - | (2,574 | ) | - | (2,574 | ) | ||||||||||
| Stock-based compensation | - | - | 1,474 | - | 1,474 | |||||||||||||
| Issuance of common stock under employee stock purchase plan | 87 | - | 1,330 | - | 1,330 | |||||||||||||
| Balance, March 31, 2017 | 66,218 | $ | 7 | $ | 107,304 | $ | 35,465 | $ | 142,776 | |||||||||
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NIC INC. CASH FLOW SUMMARY (UNAUDITED) Thousands |
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| Three months ended | ||||||||
| March 31, | ||||||||
| 2017 |
2016 |
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| Cash flows from operating activities: | ||||||||
| Net income | $ | 13,985 | $ | 12,894 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Provision for losses on accounts receivable | 425 | 24 | ||||||
| Depreciation & amortization | 1,613 | 1,664 | ||||||
| Stock-based compensation expense | 1,474 | 1,622 | ||||||
| Deferred income taxes | 912 | 593 | ||||||
| Excess tax benefits from stock-based compensation | - | 210 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in trade accounts receivable, net | (1,545 | ) | 1,151 | |||||
| (Increase) decrease in prepaid expenses & other current assets | 2,461 | (1,377 | ) | |||||
| (Increase) in other assets | (1,493 | ) | (20 | ) | ||||
| (Decrease) in accounts payable | (9,789 | ) | (3,390 | ) | ||||
| (Decrease) in accrued expenses | (3,838 | ) | (3,662 | ) | ||||
| Increase in other current liabilities | 148 | 245 | ||||||
| Increase in other long-term liabilities | 583 | 387 | ||||||
| Net cash provided by operating activities | 4,936 | 10,341 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (929 | ) | (1,485 | ) | ||||
| Proceeds from sale of property and equipment | 6 | 2 | ||||||
| Capitalized internal use software development costs | (875 | ) | (543 | ) | ||||
| Net cash used in investing activities | (1,798 | ) | (2,026 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Cash dividends on common stock | (5,342 | ) | - | |||||
| Proceeds from employee common stock purchases | 1,330 | 1,114 | ||||||
| Tax withholdings related to stock-based compensation awards | (2,574 | ) | (2,034 | ) | ||||
| Net cash used in financing activities | (6,586 | ) | (920 | ) | ||||
| Net increase (decrease) in cash | (3,448 | ) | 7,395 | |||||
| Cash, beginning of period | 127,009 | 98,388 | ||||||
| Cash, end of period | $ | 123,561 | $ | 105,783 | ||||
| Supplemental cash flow information: | ||||||||
| Non-cash investing activities: | ||||||||
| Capital expenditures accrued but not yet paid | $ | 176 | $ | 23 | ||||
| Cash payments: | ||||||||
| Income taxes paid | $ | 3,151 | $ | 6,853 | ||||
| Cash dividends paid on common stock previously restricted for payment of dividend | $ | - | $ | 36,456 | ||||
CONTACT:
NIC Inc.
Angela Davied, 913-754-7054
adavied@egov.com