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Exhibit 99.1

 

LOGO

Tyler Technologies Reports Earnings

For Fourth Quarter and Fiscal 2013

Year-end backlog up 45 percent compared to 2012

PLANO, Texas – Feb. 5, 2014 – Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the fourth quarter and year ended December 31, 2013.

Fourth Quarter Financial Highlights:

 

    Total revenue was $110.7 million in the fourth quarter of 2013, up 16.1 percent, of which 14.0 percent was organic and 2.1 percent was acquisition related, from $95.4 million in the fourth quarter of 2012.

 

    Recurring software revenue from maintenance and subscriptions was $69.1 million for the quarter, an increase of 18.5 percent compared to the fourth quarter of 2012, and comprised 62.4 percent of fourth quarter 2013 revenue.

 

    Royalty revenue from Microsoft Dynamics® AX, which is included in software licenses and royalties, was $473,000 compared to $238,000 for the fourth quarter of 2012.

 

    Operating income for the quarter was $19.5 million, an increase of 26.2 percent from the fourth quarter of 2012.

 

    Net income for the quarter was $10.5 million, or $0.30 per diluted share, compared to $9.4 million, or $0.28 per diluted share, for the fourth quarter of 2012.

 

    Cash flow from operations for the quarter was $7.4 million, compared to $16.4 million for the fourth quarter of 2012.

 

    Non-GAAP operating income for the quarter was $24.7 million, up 28.9 percent from $19.1 million for the fourth quarter of 2012.

 

    Adjusted EBITDA for the quarter was $26.0 million, up 27.9 percent compared to $20.3 million for the fourth quarter of 2012.

 

    Non-GAAP net income for the quarter was $14.0 million, or $0.39 per diluted share, compared to $11.9 million, or $0.36 per diluted share, for the fourth quarter of 2012.

Full Year Financial Highlights:

 

    Total revenue for 2013 was $416.6 million, up 14.7 percent, of which 11.6 percent was organic and 3.1 percent was acquisition related, from $363.3 million in 2012.

 

    Recurring software revenue from maintenance and subscriptions was $253.6 million for the year, an increase of 17.1 percent compared to 2012, and comprised 60.9 percent of 2013 revenue.

 

    Royalty revenue from Microsoft Dynamics AX was $3.1 million compared to $756,000 in 2012.

 

    Operating income for the year was $67.1 million, an increase of 18.6 percent from 2012.

 

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Tyler Technologies Reports Earnings

For Fourth Quarter and Fiscal 2013

Feb. 5, 2014

Page 2

 

    Net income for the year was $39.1 million, or $1.13 per diluted share, compared to $33.0 million, or $1.00 per diluted share, in 2012.

 

    Cash flow from operations for the year was $66.1 million, compared to $58.7 million in 2012.

 

    Non-GAAP operating income for the year was $86.4 million, up 22.6 percent from $70.5 million in 2012.

 

    Adjusted EBITDA for the year was $91.9 million, up 20.9 percent compared to $76.1 million in 2012.

 

    Non-GAAP net income for the year was $52.3 million, or $1.51 per diluted share, compared to $42.6 million, or $1.29 per diluted share, in 2012.

 

    Total backlog reached a new high of $551.7 million at December 31, 2013, up 45.0 percent from $380.6 million at December 31, 2012. Software-related backlog (excluding appraisal services) was $531.8 million, an increase of 51.7 percent compared to $350.6 million at December 31, 2012.

“The fourth quarter represented a strong finish to our best year ever by virtually every measure, including revenues, earnings and bookings,” said John S. Marr Jr., Tyler’s president and chief executive officer. “Subscription revenues paced our growth with a 51 percent increase over last year, reflecting increased adoption of our SaaS model as well as a significant increase in revenues from our electronic filing solution for courts. In addition, software license revenues in the fourth quarter were the highest since the fourth quarter of 2009. Our ability to achieve solid growth in licenses and improve margins while continuing to expand a high-growth cloud business is indicative of Tyler’s strong competitive position and a testament to the consistent high level of execution by more than 2,500 Tyler professionals.

“We enter 2014 with a historically high backlog level and a very active new-business environment. We remain enthusiastic about the long-term market opportunities in front of us, and we look forward to continuing to build on Tyler’s leadership position in the public sector market in the coming year,” continued Mr. Marr.

Guidance for 2014

As of February 5, 2014, Tyler Technologies is providing the following guidance for the full year 2014:

 

    Total revenues are expected to be in the range of $467 million to $475 million.

 

    Diluted earnings per share are expected to be approximately $1.31 to $1.37.

 

    Non-GAAP diluted earnings per share are expected to be approximately $1.76 to $1.85.

 

    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.

 

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Tyler Technologies Reports Earnings

For Fourth Quarter and Fiscal 2013

Feb. 5, 2014

Page 3

 

Conference Call

Tyler Technologies will hold a conference call on Thursday, February 6, at 10:00 a.m. EST to discuss the Company’s results. Due to historically high call volume, the company is offering participants the opportunity to register in advance for the conference through the following link: http://dpregister.com/10039014. 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 on February 6, 2014.

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 February 13, 2014. To access the replay, please dial 877-344-7529 (U.S. callers) or 412-317-0088 (international callers) and reference passcode 10039014.

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

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 has 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 that 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.

 

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Tyler Technologies Reports Earnings

For Fourth Quarter and Fiscal 2013

Feb. 5, 2014

Page 4

 

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.

 

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Tyler Technologies Reports Earnings

For Fourth Quarter and Fiscal 2013

Feb. 5, 2014

Page 5

 

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 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 further developed or 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) economic, political and market conditions, including the recent global economic and financial crisis, and the general tightening of access to debt or equity capital; (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

14-09

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2013      2012      2013      2012  

Revenues:

           

Software licenses and royalties

   $ 11,426       $ 8,970       $ 40,841       $ 33,928   

Subscriptions

     19,314         12,762         61,864         44,618   

Software services

     23,861         21,042         93,267         83,408   

Maintenance

     49,740         45,489         191,720         171,851   

Appraisal services

     4,971         5,496         20,825         22,543   

Hardware and other

     1,423         1,609         8,126         6,956   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     110,735         95,368         416,643         363,304   

Cost of revenues:

           

Software licenses and royalties

     676         475         2,377         1,983   

Acquired software

     493         518         2,078         1,888   

Software services, maintenance and subscriptions

     52,616         45,168         199,617         171,584   

Appraisal services

     3,232         3,619         13,809         14,889   

Hardware and other

     951         948         5,559         5,258   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenues

     57,968         50,728         223,440         195,602   

Gross profit

     52,767         44,640         193,203         167,702   

Selling, general and administrative expenses

     26,091         22,763         98,289         86,706   

Research and development expense

     6,095         5,365         23,269         20,140   

Amortization of customer and trade name intangibles

     1,129         1,093         4,517         4,279   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     19,452         15,419         67,128         56,577   

Other expense, net

     390         384         1,309         2,709   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     19,062         15,035         65,819         53,868   

Income tax provision

     8,550         5,659         26,718         20,874   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 10,512       $ 9,376       $ 39,101       $ 32,994   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per common share:

           

Basic

   $ 0.32       $ 0.30       $ 1.23       $ 1.09   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.30       $ 0.28       $ 1.13       $ 1.00   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average common shares outstanding:

           

Basic

     32,498         30,779         31,891         30,327   

Diluted

     35,348         33,421         34,590         32,916   


TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2013     2012     2013     2012  

Reconciliation of non-GAAP gross profit and margin

        

GAAP gross profit

   $ 52,767      $ 44,640      $ 193,203      $ 167,702   

Non-GAAP adjustments:

        

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

     422        293        1,509        1,084   

Add: Amortization of acquired software

     493        518        2,078        1,888   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 53,682      $ 45,451      $ 196,790      $ 170,674   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     48.5     47.7     47.2     47.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of non-GAAP operating income and margin

        

GAAP operating income

   $ 19,452      $ 15,419      $ 67,128      $ 56,577   

Non-GAAP adjustments:

        

Add: Share-based compensation expense

     3,114        1,905        11,653        7,411   

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

     472        201        982        311   

Add: Amortization of acquired software

     493        518        2,078        1,888   

Add: Amortization of customer and trade name intangibles

     1,129        1,093        4,517        4,279   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjustments subtotal

   $ 5,208      $ 3,717      $ 19,230      $ 13,889   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 24,660      $ 19,136      $ 86,358      $ 70,466   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     22.3     20.1     20.7     19.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of non-GAAP net income and earnings per share

        

GAAP net income

   $ 10,512      $ 9,376      $ 39,101      $ 32,994   

Non-GAAP adjustments:

        

Add: Total non-GAAP adjustments affecting operating income

     5,208        3,717        19,230        13,889   

Less: Tax impact related to non-GAAP adjustments

     (1,770     (1,172     (6,014     (4,307
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 13,950      $ 11,921      $ 52,317      $ 42,576   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share

   $ 0.39      $ 0.36      $ 1.51      $ 1.29   
  

 

 

   

 

 

   

 

 

   

 

 

 

Detail of share-based compensation expense

        

Cost of software services, maintenance and subscriptions

   $ 422      $ 293      $ 1,509      $ 1,084   

Selling, general and administrative expenses

     2,692        1,612        10,144        6,327   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation expense

   $ 3,114      $ 1,905      $ 11,653      $ 7,411   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of adjusted EBITDA

        

GAAP net income

   $ 10,512      $ 9,376      $ 39,101      $ 32,994   

Amortization of customer and trade name intangibles

     1,129        1,093        4,517        4,279   

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

     2,564        2,002        9,269        8,432   

Interest expense included in other expense, net

     149        310        685        2,064   

Income tax provision

     8,550        5,659        26,718        20,874   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 22,904      $ 18,440      $ 80,290      $ 68,643   
  

 

 

   

 

 

   

 

 

   

 

 

 

Share-based compensation expense

     3,114        1,905        11,653        7,411   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 26,018      $ 20,345      $ 91,943      $ 76,054   
  

 

 

   

 

 

   

 

 

   

 

 

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

     December 31,      December 31,  
     2013      2012  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 78,876       $ 6,406   

Accounts receivable, net

     106,570         99,212   

Income tax receivable

     9,721         406   

Other current assets

     14,309         10,074   

Deferred income taxes

     7,759         5,955   
  

 

 

    

 

 

 

Total current assets

     217,235         122,053   

Accounts receivable, long-term portion

     588         1,187   

Property and equipment, net

     64,844         45,381   

Non-current investments available-for-sale

     1,288         2,037   

Other assets:

     

Goodwill and other intangibles, net

     159,997         166,811   

Other

     536         1,197   
  

 

 

    

 

 

 

Total assets

   $ 444,488       $ 338,666   
  

 

 

    

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable and accrued liabilities

   $ 35,372       $ 29,185   

Deferred revenue

     156,738         140,550   
  

 

 

    

 

 

 

Total current liabilities

     192,110         169,735   

Revolving line of credit

     —           18,000   

Deferred income taxes

     6,059         5,632   

Shareholders’ equity

     246,319         145,299   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 444,488       $ 338,666   
  

 

 

    

 

 

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Three months ended
December 31,
    Twelve months ended
December 31,
 
     2013     2012     2013     2012  

Cash flows from operating activities:

        

Net income

   $ 10,512      $ 9,376      $ 39,101      $ 32,994   

Adjustments to reconcile net income to net cash provided by operations:

        

Depreciation and amortization

     3,693        3,095        13,786        12,711   

Share-based compensation expense

     3,114        1,905        11,653        7,411   

Provision for losses-accounts receivable

     729        961        729        961   

Excess tax benefit from exercise of share-based arrangements

     (15,007     (5,481     (28,207     (8,764

Deferred income taxes

     (417     (215     (1,497     (215

Changes in operating assets and liabilities, exclusive of effects of acquired companies

     4,765        6,773        30,525        13,570   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     7,389        16,414        66,090        58,668   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Proceeds from sales of investments

     1,040        —          1,090        75   

Cost of acquisitions, net of cash acquired

     —          (10,451     (181     (25,680

Additions to property and equipment

     (6,596     (2,751     (26,858     (9,102

Decrease (increase) in other

     20        (70     291        (29
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used by investing activities

     (5,536     (13,272     (25,658     (34,736
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Decrease in net borrowings on revolving line of credit

     —          (10,000     (18,000     (42,700

Contributions from employee stock purchase plan

     1,007        809        3,542        2,641   

Proceeds from exercise of stock options

     8,888        6,871        18,289        12,443   

Excess tax benefit from exercise of share-based arrangements

     15,007        5,481        28,207        8,764   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided (used) by financing activities

     24,902        3,161        32,038        (18,852
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in cash and cash equivalents

     26,755        6,303        72,470        5,080   

Cash and cash equivalents at beginning of period

     52,121        103        6,406        1,326   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 78,876      $ 6,406      $ 78,876      $ 6,406