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
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