Tyler Technologies, Inc. (NYSE: TYL) today announced financial results
for the quarter ended December 31, 2011. Tyler reported total revenues
grew 13.3 percent to $82.1 million, and net income was $8.7 million, or
$0.27 per diluted share. In the same quarter last year, the Company had
revenue of $72.4 million and net income of $7.2 million, or $0.21 per
diluted share. Gross margin increased 250 basis points to 47.5 percent
compared to 45.0 percent in the year-ago quarter.
Recurring software revenues from maintenance and subscriptions were
$47.8 million in the fourth quarter of 2011, an increase of 18.1 percent
compared to the fourth quarter of 2010, and comprised 58.3 percent of
the quarter's total revenue, compared to 55.9 percent for the same
period in 2010.
Free cash flow increased 22.1 percent to $9.0 million compared to $7.4
million in the fourth quarter of 2010. For the year 2011, Tyler reported
record free cash flow, excluding capital expenditures for real estate,
of $50.8 million, an increase of 60.1 percent, compared to free cash
flow, excluding capital expenditures for real estate, of $31.7 million
for 2010. Including capital expenditures for real estate, 2011 free cash
flow was $44.2 million compared to 2010 free cash flow of $30.4 million.
EBITDA, or earnings before interest, income taxes, depreciation and
amortization, increased 28.6 percent to $17.1 million, compared to $13.3
million in the prior-year quarter.
Total backlog reached a new high of $339.8 million at December 31, 2011,
an increase of 20.7 percent from $281.4 million at December 31, 2010 and
increased sequentially by 13.8 percent from $298.7 million at September
30, 2011. Software-related backlog (excluding appraisal services) was
$319.9 million, an increase of 28.9 percent compared to $248.2 million
at December 31, 2010, and sequentially increased by 15.3 percent from
$277.5 million at September 30, 2011.
Tyler ended the fourth quarter of 2011 with $3.3 million in cash and
investments and $81.0 million of availability under its $150.0 million
revolving line of credit. During the fourth quarter, Tyler repurchased
approximately 53,000 shares of its common stock at an average price of
$24.77 per share. For the year 2011, Tyler repurchased approximately 3.0
million shares at an average price of $23.90. As of December 31, 2011,
the Company was authorized to repurchase up to 1.7 million additional
shares.
"Tyler's strong fourth-quarter financial performance builds upon a trend
of improving results that began in the second quarter as the market
started to show signs of modest improvement," said John S. Marr Jr.,
Tyler's president and chief executive officer. "By many measures, our
fourth-quarter results are the best we've ever reported. We achieved
double-digit revenue growth driven by continued solid growth in
recurring revenues from subscriptions and maintenance. We're also
pleased that software license revenue grew year-over-year for the first
time since the fourth quarter of 2009. In addition, our gross margin of
47.5 percent represents a new quarterly high.
"New contract signings in the fourth quarter, which included a contract
with the state of Maryland valued at approximately $45 million for our
Odyssey® court management system, were very good," said Mr.
Marr. "Tyler enters 2012 with a record backlog of signed contracts and a
very active sales pipeline. We are cautiously optimistic that market
conditions will continue to improve in 2012, and with Tyler's strong
competitive position our outlook for the coming year is positive."
Annual Guidance for 2012
Total revenues for 2012 are currently expected to be in the range of
$350 million to $356 million. Tyler expects that diluted earnings per
share will be approximately $0.94 to $1.01 and approximately 60 percent
of earnings will occur in the second half of the year. These estimates
include assumed pretax non-cash stock-based compensation expense of
approximately $7.4 million, or $0.18 per share after taxes. The Company
currently estimates that its effective tax rate for 2012 will be
approximately 38.5 percent. Tyler expects that capital expenditures for
the year will be between $15 million and $16 million, including
approximately $9 million related to real estate, and that depreciation
and amortization expense will be between $11.2 million and $11.7 million.
Tyler Technologies will hold a conference call on Thursday, February 23,
at 10 a.m. Eastern Time to discuss the Company's 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 10009867 when
prompted. A replay will be available two hours after the completion of
the call through March 2, 2012. To access the replay, please dial
877-344-7529 (U.S. callers) and 412-317-0088 (international callers) and
reference passcode 10009867. 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 10,000 local government offices
in all 50 states, Canada, the Caribbean and the United Kingdom. Forbes
has named Tyler one of "America's Best Small Companies" four times in
the last five years. More information about Dallas-based 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 Tyler's
core operations.
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.
|
|
|
TYLER TECHNOLOGIES, INC.
|
|
CONDENSED INCOME STATEMENTS
|
|
(Amounts in thousands, except per share data)
|
|
| |
| |
| |
| |
| | | | | | | |
|
| |
Three Months Ended December 31,
| |
Twelve Months Ended December 31,
|
| |
| 2011 | |
|
2010
| |
| 2011 | |
|
2010
|
|
Revenues:
| | | | | | | | |
|
Software licenses
| | $ | 9,833 | |
$
|
8,469
| | $ | 32,594 | |
$
|
34,913
|
|
Subscriptions
| | | 8,930 | | |
6,218
| | | 31,160 | | |
23,298
|
|
Software services
| | | 17,217 | | |
16,060
| | | 69,617 | | |
68,340
|
|
Maintenance
| | | 38,919 | | |
34,298
| | | 146,498 | | |
135,655
|
|
Appraisal services
| | | 5,283 | | |
5,742
| | | 23,228 | | |
20,554
|
|
Hardware and other
| |
| 1,897 | |
|
1,652
| |
| 6,294 | |
|
5,868
|
|
Total revenues
| | | 82,079 | | |
72,439
| | | 309,391 | | |
288,628
|
| | | | | | | |
|
|
Cost of revenues:
| | | | | | | | |
|
Software licenses
| | | 714 | | |
985
| | | 3,034 | | |
3,456
|
|
Acquired software
| | | 343 | | |
398
| | | 1,125 | | |
1,592
|
|
Software services, maintenance and subscriptions
| | | 37,405 | | |
33,901
| | | 143,776 | | |
138,085
|
|
Appraisal services
| | | 3,248 | | |
3,468
| | | 14,550 | | |
12,910
|
|
Hardware and other
| |
| 1,349 | |
|
1,071
| |
| 4,994 | |
|
4,268
|
|
Total cost of revenues
| | | 43,059 | | |
39,823
| | | 167,479 | | |
160,311
|
| | | | | | | |
|
|
Gross profit
| | | 39,020 | | |
32,616
| | | 141,912 | | |
128,317
|
| | | | | | | |
|
|
Selling, general and administrative expenses
| | | 21,141 | | |
17,143
| | | 75,650 | | |
69,480
|
|
Research and development expense
| | | 2,634 | | |
3,478
| | | 16,414 | | |
13,971
|
|
Amortization of customer and trade name intangibles
| |
| 923 | |
|
806
| |
| 3,331 | |
|
3,225
|
|
Operating income
| | | 14,322 | | |
11,189
| | | 46,517 | | |
41,641
|
|
Other expense, net
| |
| 818 | |
|
1,030
| |
| 2,404 | |
|
1,742
|
|
Income before income taxes
| | | 13,504 | | |
10,159
| | | 44,113 | | |
39,899
|
|
Income tax provision
| |
| 4,805 | |
|
2,949
| |
| 16,556 | |
|
14,845
|
|
Net income
| | $ | 8,699 | |
$
|
7,210
| | $ | 27,557 | |
$
|
25,054
|
| | | | | | | |
|
|
Earnings per common share:
| | | | | | | | |
|
Basic
| | $ | 0.29 | |
$
|
0.22
| | $ | 0.88 | |
$
|
0.74
|
|
Diluted
| | $ | 0.27 | |
$
|
0.21
| | $ | 0.83 | |
$
|
0.71
|
| | | | | | | |
|
|
EBITDA (1) | | $ | 17,109 | |
$
|
13,306
| | $ | 56,681 | |
$
|
51,572
|
| | | | | | | |
|
|
Weighted average common shares outstanding:
| | | | | | | | |
|
Basic
| | | 29,823 | | |
32,285
| | | 31,267 | | |
34,075
|
|
Diluted
| | | 32,031 | | |
33,895
| | | 33,154 | | |
35,528
|
| | | | | | | |
|
| | | | | | | |
|
| (1) Reconciliation of EBITDA
| |
Three Months Ended December 31,
| |
Twelve Months Ended December 31,
|
| |
| 2011 | |
|
2010
| |
| 2011 | |
|
2010
|
|
Net income
| | $ | 8,699 | |
$
|
7,210
| | $ | 27,557 | |
$
|
25,054
|
|
Amortization of customer and trade name intangibles
| | | 923 | | |
806
| | | 3,331 | | |
3,225
|
|
Depreciation and other amortization included in cost of revenues,
| | | | | | | | |
|
SG&A and other expenses
| | | 1,975 | | |
1,905
| | | 7,345 | | |
7,563
|
|
Interest expense included in other expense, net
| | | 707 | | |
436
| | | 1,892 | | |
885
|
|
Income tax provision
| |
| 4,805 | |
|
2,949
| |
| 16,556 | |
|
14,845
|
|
EBITDA
| | $ | 17,109 | |
$
|
13,306
| | $ | 56,681 | |
$
|
51,572
|
|
|
|
TYLER TECHNOLOGIES, INC.
|
|
CONDENSED BALANCE SHEETS
|
|
(Amounts in thousands)
|
|
| |
| |
| | | |
|
| | |
|
| | December 31, | |
December 31,
|
| |
| 2011 | |
|
2010
|
|
ASSETS
| | | | |
| | | |
|
|
Current assets:
| | | | |
|
Cash and cash equivalents
| | $ | 1,326 | |
$
|
2,114
|
|
Short-term investments available-for-sale
| | | 25 | | |
25
|
|
Accounts receivable, net
| | | 90,012 | | |
81,860
|
|
Other current assets
| | | 10,634 | | |
11,344
|
|
Deferred income taxes
| |
| 5,095 | |
|
3,106
|
|
Total current assets
| | | 107,092 | | |
98,449
|
| | | |
|
|
Accounts receivable, long-term portion
| | | 2,095 | | |
1,231
|
|
Property and equipment, net
| | | 40,915 | | |
34,851
|
|
Non-current investments available-for-sale
| | | 1,953 | | |
2,126
|
| | | |
|
|
Other assets:
| | | | |
|
Goodwill and other intangibles, net
| | | 141,722 | | |
125,138
|
|
Other
| |
| 1,614 | |
|
2,237
|
| | | |
|
|
Total assets
| | $ | 295,391 | |
$
|
264,032
|
| | | |
|
| | | |
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
| | | | |
| | | |
|
|
Current liabilities:
| | | | |
|
Accounts payable and accrued liabilities
| | $ | 27,962 | |
$
|
22,059
|
|
Deferred revenue
| |
| 123,678 | |
|
102,590
|
|
Total current liabilities
| | | 151,640 | | |
124,649
|
| | | |
|
|
Revolving line of credit
| | | 60,700 | | |
26,500
|
|
Deferred income taxes
| | | 4,941 | | |
5,911
|
|
Shareholders' equity
| |
| 78,110 | |
|
106,972
|
| | | |
|
|
Total liabilities and shareholders' equity
| | $ | 295,391 | |
$
|
264,032
|
|
| |
| |
| |
| |
|
TYLER TECHNOLOGIES, INC.
|
|
CONDENSED STATEMENTS OF CASH FLOWS
|
|
(In thousands)
|
| | | | | | | |
|
| | | | | | | |
|
| | | | | | | |
|
| |
Three Months Ended December 31,
| |
Twelve months ended December 31,
|
| |
| 2011 |
| |
|
2010
|
| |
| 2011 |
| |
|
2010
|
|
|
Cash flows from operating activities:
| | | | | | | | |
|
Net income
| | $ | 8,699 | | |
$
|
7,210
| | | $ | 27,557 | | |
$
|
25,054
| |
|
Adjustments to reconcile net income to net cash
| | | | | | | | |
|
provided by operations:
| | | | | | | | |
|
Depreciation and amortization
| | | 2,898 | | | |
2,711
| | | | 10,676 | | | |
10,788
| |
|
Share-based compensation expense
| | | 1,668 | | | |
1,515
| | | | 6,253 | | | |
6,132
| |
|
Provision for losses-accounts receivable
| | | 805 | | | |
1,161
| | | | 805 | | | |
1,161
| |
|
Excess tax benefit from exercise of share-based arrangements
| | | (1,869 | ) | | |
(791
|
)
| | | (3,590 | ) | | |
(2,000
|
)
|
|
Deferred income taxes
| | | (2,916 | ) | | |
(959
|
)
| | | (2,916 | ) | | |
(959
|
)
|
|
Changes in operating assets and liabilities, exclusive of
| | | | | | | | |
|
effects of acquired companies
| |
| 2,045 |
| |
|
(2,761
|
)
| |
| 17,650 |
| |
|
(4,826
|
)
|
|
Net cash provided by operating activities
| |
| 11,330 |
| |
|
8,086
|
| |
| 56,435 |
| |
|
35,350
|
|
| | | | | | | |
|
|
Cash flows from investing activities:
| | | | | | | | |
|
Proceeds from sales of investments
| | | - | | | |
-
| | | | 50 | | | |
75
| |
|
Cost of acquisitions, net of cash acquired
| | | (17,298 | ) | | |
-
| | | | (17,298 | ) | | |
(9,661
|
)
|
|
Additions to property and equipment
| | | (2,352 | ) | | |
(733
|
)
| | | (12,278 | ) | | |
(4,930
|
)
|
|
Decrease in restricted investments
| | | - | | | |
-
| | | | - | | | |
6,000
| |
|
Decrease (increase) in other
| |
| 518 |
| |
|
(175
|
)
| |
| 717 |
| |
|
(178
|
)
|
|
Net cash used by investing activities
| |
| (19,132 | ) | |
|
(908
|
)
| |
| (28,809 | ) | |
|
(8,694
|
)
|
| | | | | | | |
|
|
Cash flows from financing activities:
| | | | | | | | |
|
Increase in net borrowings on revolving line of credit
| | | 2,700 | | | |
10,000
| | | | 34,200 | | | |
26,500
| |
|
Purchase of treasury shares
| | | (3,277 | ) | | |
(24,119
|
)
| | | (71,802 | ) | | |
(65,793
|
)
|
|
Contributions from employee stock purchase plan
| | | 573 | | | |
497
| | | | 2,045 | | | |
1,901
| |
|
Proceeds from exercise of stock options
| | | 1,983 | | | |
1,318
| | | | 3,553 | | | |
3,181
| |
|
Debt issuance costs
| | | - | | | |
-
| | | | - | | | |
(2,027
|
)
|
|
Excess tax benefit from exercise of share-based arrangements
| |
| 1,869 |
| |
|
791
|
| |
| 3,590 |
| |
|
2,000
|
|
|
Net cash provided (used) by financing activities
| |
| 3,848 |
| |
|
(11,513
|
)
| |
| (28,414 | ) | |
|
(34,238
|
)
|
| | | | | | | |
|
|
Net decrease in cash and cash equivalents
| | | (3,954 | ) | | |
(4,335
|
)
| | | (788 | ) | | |
(7,582
|
)
|
|
Cash and cash equivalents at beginning of period
| |
| 5,280 |
| |
|
6,449
|
| |
| 2,114 |
| |
|
9,696
|
|
| | | | | | | |
|
|
Cash and cash equivalents at end of period
| | $ | 1,326 |
| |
$
|
2,114
|
| | $ | 1,326 |
| |
$
|
2,114
|
|
| | | | | | | |
|
| | | | | | | |
|
|
Reconciliation of free cash flow:
| |
Three Months Ended December 31,
| |
Twelve months ended December 31,
|
| |
| 2011 |
| |
|
2010
|
| |
| 2011 |
| |
|
2010
|
|
|
Cash provided by operating activities
| | $ | 11,330 | | |
$
|
8,086
| | | $ | 56,435 | | |
$
|
35,350
| |
|
Capital expenditures
| |
| (2,352 | ) | |
|
(733
|
)
| |
| (12,278 | ) | |
|
(4,930
|
)
|
|
Free cash flow
| | | 8,978 | | | |
7,353
| | | | 44,157 | | | |
30,420
| |
|
Capital expenditures for real estate
| |
| - |
| |
|
-
|
| |
| 6,657 |
| |
|
1,310
|
|
|
Free cash flow, excluding real estate
| | $ | 8,978 |
| |
$
|
7,353
|
| | $ | 50,814 |
| |
$
|
31,730
|
|
Tyler Technologies, Inc.
Brian K. Miller, 972-713-3720
Executive
Vice President - CFO
brian.miller@tylertech.com