Tyler Technologies Reports Earnings For Fourth Quarter and Fiscal 2013 Year-end backlog up 45 percent compared to 2012 Business Wire PLANO, Texas -- February 5, 2014 Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the fourth quarter and year ended December 31, 2013. Tyler's President and CEO John S. Marr Jr. (Photo: Business Wire) Tyler's President and CEO John S. Marr Jr. (Photo: Business Wire) 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. *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. 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. 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 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. TYLER TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) (Unaudited) Three Months Ended December Twelve Months Ended 31, December 31, 2013 2012 2013 2012 Revenues: Software licenses and $ 11,426 $ 8,970 $ 40,841 $ 33,928 royalties Subscriptions 19,314 12,762 61,864 44,618 Software 23,861 21,042 93,267 83,408 services Maintenance 49,740 45,489 191,720 171,851 Appraisal 4,971 5,496 20,825 22,543 services Hardware and 1,423 1,609 8,126 6,956 other Total revenues 110,735 95,368 416,643 363,304 Cost of revenues: Software licenses and 676 475 2,377 1,983 royalties Acquired 493 518 2,078 1,888 software Software services, 52,616 45,168 199,617 171,584 maintenance and subscriptions Appraisal 3,232 3,619 13,809 14,889 services Hardware and 951 948 5,559 5,258 other Total cost of 57,968 50,728 223,440 195,602 revenues Gross profit 52,767 44,640 193,203 167,702 Selling, general and 26,091 22,763 98,289 86,706 administrative expenses Research and development 6,095 5,365 23,269 20,140 expense Amortization of customer and 1,129 1,093 4,517 4,279 trade name intangibles Operating 19,452 15,419 67,128 56,577 income Other expense, 390 384 1,309 2,709 net Income before 19,062 15,035 65,819 53,868 income taxes Income tax 8,550 5,659 26,718 20,874 provision 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 Twelve Months Ended December 31, December 31, 2013 2012 2013 2012 Reconciliation of non-GAAP gross profit and margin GAAP gross $ 52,767 $ 44,640 $ 193,203 $ 167,702 profit Non-GAAP adjustments: Add: Share-based compensation expense 422 293 1,509 1,084 included in cost of revenues Add: Amortization 493 518 2,078 1,888 of acquired software Non-GAAP gross $ 53,682 $ 45,451 $ 196,790 $ 170,674 profit Non-GAAP gross 48.5 % 47.7 % 47.2 % 47.0 % margin Reconciliation of non-GAAP operating income and margin GAAP operating $ 19,452 $ 15,419 $ 67,128 $ 56,577 income Non-GAAP adjustments: Add: Share-based 3,114 1,905 11,653 7,411 compensation expense Add: Employer portion of payroll tax 472 201 982 311 related to employee stock transactions Add: Amortization 493 518 2,078 1,888 of acquired software Add: Amortization of customer 1,129 1,093 4,517 4,279 and trade name intangibles Non-GAAP adjustments $ 5,208 $ 3,717 $ 19,230 $ 13,889 subtotal Non-GAAP operating $ 24,660 $ 19,136 $ 86,358 $ 70,466 income Non-GAAP operating 22.3 % 20.1 % 20.7 % 19.4 % margin Reconciliation of non-GAAP net income and earnings per share GAAP net $ 10,512 $ 9,376 $ 39,101 $ 32,994 income Non-GAAP adjustments: Add: Total non-GAAP adjustments 5,208 3,717 19,230 13,889 affecting operating income Less: Tax impact related (1,770 ) (1,172 ) (6,014 ) (4,307 ) to non-GAAP adjustments Non-GAAP net $ 13,950 $ 11,921 $ 52,317 $ 42,576 income Non-GAAP earnings per $ 0.39 $ 0.36 $ 1.51 $ 1.29 diluted share Detail of share-based compensation expense Cost of software services, $ 422 $ 293 $ 1,509 $ 1,084 maintenance and subscriptions Selling, general and 2,692 1,612 10,144 6,327 administrative expenses Total share-based $ 3,114 $ 1,905 $ 11,653 $ 7,411 compensation expense Reconciliation of adjusted EBITDA GAAP net $ 10,512 $ 9,376 $ 39,101 $ 32,994 income Amortization of customer 1,129 1,093 4,517 4,279 and trade name intangibles Depreciation and other amortization included in cost of revenues, SG&A 2,564 2,002 9,269 8,432 and other expenses Interest expense included in 149 310 685 2,064 other expense, net Income tax 8,550 5,659 26,718 20,874 provision EBITDA $ 22,904 $ 18,440 $ 80,290 $ 68,643 Share-based compensation 3,114 1,905 11,653 7,411 expense Adjusted $ 26,018 $ 20,345 $ 91,943 $ 76,054 EBITDA 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 Twelve months ended 31, 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 3,693 3,095 13,786 12,711 amortization Share-based compensation 3,114 1,905 11,653 7,411 expense Provision for losses-accounts 729 961 729 961 receivable Excess tax benefit from exercise of (15,007 ) (5,481 ) (28,207 ) (8,764 ) share-based arrangements Deferred income (417 ) (215 ) (1,497 ) (215 ) taxes Changes in operating assets and liabilities, exclusive of effects of acquired 4,765 6,773 30,525 13,570 companies Net cash provided by 7,389 16,414 66,090 58,668 operating activities Cash flows from investing activities: Proceeds from sales of 1,040 - 1,090 75 investments Cost of acquisitions, - (10,451 ) (181 ) (25,680 ) net of cash acquired Additions to property and (6,596 ) (2,751 ) (26,858 ) (9,102 ) equipment Decrease (increase) in 20 (70 ) 291 (29 ) other Net cash used by investing (5,536 ) (13,272 ) (25,658 ) (34,736 ) activities Cash flows from financing activities: Decrease in net borrowings on - (10,000 ) (18,000 ) (42,700 ) revolving line of credit Contributions from employee 1,007 809 3,542 2,641 stock purchase plan Proceeds from exercise of 8,888 6,871 18,289 12,443 stock options Excess tax benefit from exercise of 15,007 5,481 28,207 8,764 share-based arrangements Net cash provided (used) 24,902 3,161 32,038 (18,852 ) by financing activities Net increase in cash and cash 26,755 6,303 72,470 5,080 equivalents Cash and cash equivalents at 52,121 103 6,406 1,326 beginning of period Cash and cash equivalents at $ 78,876 $ 6,406 $ 78,876 $ 6,406 end of period Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140205006441/en/ Multimedia Available:http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50798201&lang=en Contact: Tyler Technologies, Inc. Brian K. Miller, 972-713-3720 Executive Vice President - CFO email@example.com
Tyler Technologies Reports Earnings For Fourth Quarter and Fiscal 2013
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