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8-K - FORM 8-K - TYLER TECHNOLOGIES INC | d85319e8vk.htm |
Exhibit 99.1
Tyler Technologies Reports Earnings
For Third Quarter 2011
For Third Quarter 2011
Quarterly revenue and backlog reach new highs
DALLAS Oct. 26, 2011 Tyler Technologies, Inc. (NYSE: TYL) today announced financial
results for the quarter ended September 30, 2011. Tyler reported total revenue of $77.2 million and
net income of $7.5 million, or $0.23 per diluted share. In the same quarter last year, the Company
had revenue of $73.8 million and net income of $6.7 million, or $0.19 per diluted share. Gross
margin increased 180 basis points to 46.8 percent compared to 45.0 percent in the year-ago quarter.
Recurring software revenue from maintenance and subscriptions was $45.0 million in the third
quarter of 2011, an increase of 10.4 percent compared to the third quarter of 2010, and comprised
58.3 percent of the quarters total revenue.
Free cash flow for the third quarter of 2011 was $24.3 million (cash provided by operating
activities of $25.8 million minus capital expenditures of $1.5 million) compared to $26.9 million
(cash provided by operating activities of $27.6 million minus capital expenditures of $0.7 million)
in the third quarter of last year.
EBITDA, or earnings before interest, income taxes, depreciation and amortization, was $14.8 million
in the third quarter of 2011, compared to $14.3 million in the prior-year quarter.
Total backlog was a record high $298.7 million at September 30, 2011, up 17.7 percent from $253.8
million at September 30, 2010. Software-related backlog (excluding appraisal services) was $277.5
million, an increase of 28.4 percent compared to $216.2 million at September 30, 2010.
Tyler ended the third quarter of 2011 with $7.4 million in cash and investments and $83.7 million
of availability under its $150.0 million revolving line of credit. During the third quarter, Tyler
repurchased approximately 2.0 million shares of its common stock at an average price of $24.34 per
share. As of September 30, 2011, the Company was authorized to repurchase up to 1.8 million
additional shares.
We are pleased by our results in the third quarter, which by many measures was our best quarter
ever, particularly in a market that remains challenging. Although software license revenues remain
weak, we continue to drive solid growth in recurring revenues from maintenance and subscriptions.
In addition, our software services revenues grew for the first time in seven quarters, said John
S. Marr Jr., Tylers president and chief executive officer. The leverage in our recurring revenues
was reflected in our gross margin, which reached a new all-time high at 46.8 percent.
Bookings in the third quarter were good, pushing our backlog to a new high, and our new-business
pipeline remains active with what appears to be a modest increase in market activity, said Mr.
Marr. Although the market is certainly less than robust and the timing and mix of new business is
somewhat unpredictable, our competitive position is strong and our current guidance for the year
reflects an improvement from our prior outlook.
- more -
Tyler Technologies Reports Earnings
For Third Quarter 2011
Oct. 26, 2011
Page 2
For Third Quarter 2011
Oct. 26, 2011
Page 2
Annual Guidance for 2011
Total revenues for 2011 are currently expected to be in the range of $308 million to $311 million.
Tyler expects that diluted earnings per share will be approximately $0.78 to $0.82. These estimates
include assumed pretax non-cash stock-based compensation expense of approximately $6.5 million, or
$0.15 per share after taxes. The Company currently estimates that its effective tax rate for 2011
will be approximately 38.4 percent. Tyler expects that capital expenditures for the year will be
between $11.7 million and $12.2 million, including approximately $6.6 million related to real
estate, and that depreciation and amortization expense will be between $11.0 million and $11.5
million.
Tyler Technologies will hold a conference call on Thursday, October 27, at noon Eastern Time to
discuss the Companys results. To participate in the teleconference, please dial into the call a
few minutes before the start time: (877) 317-6789 (U.S. callers) and (412) 317-6789 (international
callers), and reference confirmation code 10005339 when prompted. A replay will be available two
hours after the completion of the call through November 4, 2011. To access the replay, please dial
(877) 344-7529 (U.S. callers) and (412) 317-0088 (international callers) and reference passcode
10005339. The live webcast and archived replay can also be accessed at www.tylertech.com.
About Tyler Technologies, Inc.
Based in Dallas, Tyler Technologies 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. Tylers client base includes more than
10,000 local government offices throughout all 50 states, Canada, the Caribbean and the United
Kingdom. Forbes has named Tyler one of Americas Best Small Companies four times in the last five
years. More information about Tyler Technologies can be found at www.tylertech.com.
Non-GAAP Measures
This press release discloses the financial measures of EBITDA and free cash flow. These financial
measures are not prepared in accordance with generally accepted accounting principles (GAAP) and
are therefore considered non-GAAP financial measures. The non-GAAP measures should be considered in
addition to, and not as a substitute for, or superior to, operating income, cash flows, or other
measures of financial performance prepared in accordance with GAAP. The non-GAAP measures used by
Tyler Technologies may be different from non-GAAP measures used by other companies. We believe the
presentation of these non-GAAP financial measures provides useful information to users of our
financial statements and is helpful to fully understand our past financial performance and
prospects for the future. We believe EBITDA and free cash flow are widely used by investors,
analysts, and other users of our financial statements to analyze operating performance, provide
meaningful comparisons to prior periods and to compare our results to those of other companies, and
they provide a more complete understanding
of our underlying operational results and trends, as well as our marketplace performance and
our ability to generate cash. In addition, we internally monitor and review these non-GAAP
financial measures on a
consolidated basis as some of the primary indicators management uses
to evaluate Company performance and for planning and forecasting future periods. Therefore,
management believes that EBITDA and free cash flow provide meaningful supplemental information to
the investor to fully assess the financial performance, trends and future prospects of Tylers core
operations.
- more -
Tyler Technologies Reports Earnings
For Third Quarter 2011
Oct. 26, 2011
Page 3
For Third Quarter 2011
Oct. 26, 2011
Page 3
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 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 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; (3) economic, political and market conditions, including the recent global economic and
financial crisis, and the general tightening of access to debt or equity capital; (4) technological
and market risks associated with the development of new products or services or of new versions of
existing or acquired products or services; (5) 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; (6) 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; (7) 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 (8) 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)
(Comparative results follow)
Contact: Brian K. Miller
Executive Vice President CFO
Tyler Technologies, Inc.
(972) 713-3720
brian.miller@tylertech.com
Executive Vice President CFO
Tyler Technologies, Inc.
(972) 713-3720
brian.miller@tylertech.com
11-59
TYLER TECHNOLOGIES, INC.
CONDENSED INCOME STATEMENTS
(Amounts in thousands, except per share data)
(Unaudited)
CONDENSED INCOME STATEMENTS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Software licenses |
$ | 7,631 | $ | 9,260 | $ | 22,761 | $ | 26,444 | ||||||||
Subscriptions |
7,989 | 6,020 | 22,230 | 17,080 | ||||||||||||
Software services |
17,644 | 16,718 | 52,400 | 52,280 | ||||||||||||
Maintenance |
37,011 | 34,729 | 107,579 | 101,357 | ||||||||||||
Appraisal services |
5,761 | 5,612 | 17,945 | 14,812 | ||||||||||||
Hardware and other |
1,148 | 1,430 | 4,397 | 4,216 | ||||||||||||
Total revenues |
77,184 | 73,769 | 227,312 | 216,189 | ||||||||||||
Cost of revenues: |
||||||||||||||||
Software licenses |
536 | 912 | 2,320 | 2,471 | ||||||||||||
Acquired software |
243 | 398 | 782 | 1,194 | ||||||||||||
Software services, maintenance and subscriptions |
35,689 | 34,708 | 106,371 | 104,184 | ||||||||||||
Appraisal services |
3,776 | 3,434 | 11,302 | 9,442 | ||||||||||||
Hardware and other |
808 | 1,110 | 3,645 | 3,197 | ||||||||||||
Total cost of revenues |
41,052 | 40,562 | 124,420 | 120,488 | ||||||||||||
Gross profit |
36,132 | 33,207 | 102,892 | 95,701 | ||||||||||||
Selling, general and administrative expenses |
18,755 | 17,337 | 54,509 | 52,337 | ||||||||||||
Research and development expense |
4,196 | 3,233 | 13,780 | 10,493 | ||||||||||||
Amortization of customer and trade name intangibles |
801 | 806 | 2,408 | 2,419 | ||||||||||||
Operating income |
12,380 | 11,831 | 32,195 | 30,452 | ||||||||||||
Other expense, net |
(562 | ) | (568 | ) | (1,586 | ) | (712 | ) | ||||||||
Income before income taxes |
11,818 | 11,263 | 30,609 | 29,740 | ||||||||||||
Income tax provision |
4,312 | 4,540 | 11,751 | 11,896 | ||||||||||||
Net income |
$ | 7,506 | $ | 6,723 | $ | 18,858 | $ | 17,844 | ||||||||
Earnings per common share: |
||||||||||||||||
Basic |
$ | 0.24 | $ | 0.20 | $ | 0.60 | $ | 0.52 | ||||||||
Diluted |
$ | 0.23 | $ | 0.19 | $ | 0.57 | $ | 0.50 | ||||||||
EBITDA (1) |
$ | 14,823 | $ | 14,340 | $ | 39,572 | $ | 38,266 | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
31,097 | 34,103 | 31,247 | 34,075 | ||||||||||||
Diluted |
32,960 | 35,410 | 33,027 | 35,475 |
(1) | Reconciliation of EBITDA |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income |
$ | 7,506 | $ | 6,723 | $ | 18,858 | $ | 17,844 | ||||||||
Amortization of customer and trade name intangibles |
801 | 806 | 2,408 | 2,419 | ||||||||||||
Depreciation and other amortization included in
cost of revenues,
SG&A and other expenses |
1,758 | 1,953 | 5,370 | 5,658 | ||||||||||||
Interest expense included in other expense, net |
446 | 318 | 1,185 | 449 | ||||||||||||
Income tax provision |
4,312 | 4,540 | 11,751 | 11,896 | ||||||||||||
EBITDA |
$ | 14,823 | $ | 14,340 | $ | 39,572 | $ | 38,266 | ||||||||
TYLER TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
(Amounts in thousands)
CONDENSED BALANCE SHEETS
(Amounts in thousands)
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 5,280 | $ | 2,114 | ||||
Short-term investments available-for-sale |
| 25 | ||||||
Accounts receivable, net |
75,456 | 81,860 | ||||||
Other current assets |
10,491 | 11,344 | ||||||
Deferred income taxes |
3,106 | 3,106 | ||||||
Total current assets |
94,333 | 98,449 | ||||||
Accounts receivable, long-term portion |
1,212 | 1,231 | ||||||
Property and equipment, net |
40,780 | 34,851 | ||||||
Non-current investments available-for-sale |
2,101 | 2,126 | ||||||
Other assets: |
||||||||
Goodwill and other intangibles, net |
121,643 | 125,138 | ||||||
Other |
1,667 | 2,237 | ||||||
Total assets |
$ | 261,736 | $ | 264,032 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 24,938 | $ | 22,059 | ||||
Deferred revenue |
108,114 | 102,590 | ||||||
Total current liabilities |
133,052 | 124,649 | ||||||
Revolving line of credit |
58,000 | 26,500 | ||||||
Deferred income taxes |
5,972 | 5,911 | ||||||
Shareholders equity |
64,712 | 106,972 | ||||||
Total liabilities and shareholders equity |
$ | 261,736 | $ | 264,032 | ||||
TYLER TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine months ended September 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 18,858 | $ | 17,844 | ||||
Adjustments to reconcile net income to net cash
provided by operations: |
||||||||
Depreciation and amortization |
7,778 | 8,077 | ||||||
Share-based compensation expense |
4,585 | 4,617 | ||||||
Excess tax benefit from exercise of share-based arrangements |
(1,721 | ) | (1,209 | ) | ||||
Changes in operating assets and liabilities, exclusive of
effects of acquired companies |
15,605 | (2,065 | ) | |||||
Net cash provided by operating activities |
45,105 | 27,264 | ||||||
Cash flows from investing activities: |
||||||||
Proceeds from sales of investments |
50 | 75 | ||||||
Cost of acquisitions, net of cash acquired |
| (9,661 | ) | |||||
Additions to property and equipment |
(9,926 | ) | (4,197 | ) | ||||
Decrease in restricted investments |
| 6,000 | ||||||
Decrease (increase) in other |
199 | (3 | ) | |||||
Net cash used by investing activities |
(9,677 | ) | (7,786 | ) | ||||
Cash flows from financing activities: |
||||||||
Purchase of treasury shares |
(68,525 | ) | (41,674 | ) | ||||
Increase in net borrowings on revolving line of credit |
31,500 | 16,500 | ||||||
Contributions from employee stock purchase plan |
1,472 | 1,404 | ||||||
Proceeds from exercise of stock options |
1,570 | 1,863 | ||||||
Debt issuance costs |
| (2,027 | ) | |||||
Excess tax benefit from exercise of share-based arrangements |
1,721 | 1,209 | ||||||
Net cash used by financing activities |
(32,262 | ) | (22,725 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
3,166 | (3,247 | ) | |||||
Cash and cash equivalents at beginning of period |
2,114 | 9,696 | ||||||
Cash and cash equivalents at end of period |
$ | 5,280 | $ | 6,449 | ||||