Tyler Technologies, Inc. (NYSE: TYL) today announced financial
results for the fourth quarter and year ended December 31,
2012.
Fourth Quarter Financial Highlights:
- Total revenue was $95.4 million in the
fourth quarter of 2012, up 16.2 percent, of which 10.9 percent was
organic and 5.3 percent was acquisition related, from $82.1 million
in the fourth quarter of 2011.
- Recurring software revenue from
maintenance and subscriptions was $58.3 million for the quarter, an
increase of 21.7 percent compared to the fourth quarter of 2011,
and comprised 61.1 percent of fourth quarter 2012 revenue.
- Operating income for the quarter was
$15.4 million, an increase of 7.7 percent from the fourth quarter
of 2011.
- Net income for the quarter was $9.4
million, or $0.28 per diluted share, compared to $8.7 million, or
$0.27 per diluted share, for the fourth quarter of 2011.
- Cash flow from operations for the
quarter was $16.4 million, compared to $11.3 million for the fourth
quarter of 2011.
- Non-GAAP operating income for the
quarter was $18.9 million, up 9.7 percent from $17.3 million for
the fourth quarter of 2011.
- Adjusted EBITDA for the quarter was
$20.3 million, compared to $18.8 million for the fourth quarter of
2011.
- Non-GAAP net income for the quarter was
$11.8 million, or $0.35 per diluted share, compared to $10.8
million, or $0.34 per diluted share, for the fourth quarter of
2011.
Full Year Financial Highlights:
- Total revenue for 2012 was $363.3
million, up 17.4 percent, of which 11.1 percent was organic and 6.3
percent was acquisition related, from $309.4 million in 2011.
- Recurring software revenue from
maintenance and subscriptions was $216.5 million for the year, an
increase of 21.8 percent compared to 2011, and comprised 59.6
percent of 2012 revenue.
- Operating income for the year was $56.6
million, an increase of 21.6 percent from 2011.
- Net income for the year was $33.0
million, or $1.00 per diluted share, compared to $27.6 million, or
$0.83 per diluted share, in 2011.
- Cash flow from operations for the year
was $58.7 million, compared to $56.4 million in 2011.
- Non-GAAP operating income for the year
was $70.2 million, up 22.6 percent from $57.2 million in 2011.
- Adjusted EBITDA for the year was $76.1
million, compared to $62.9 million in 2011.
- Non-GAAP net income for the year was
$42.4 million, or $1.29 per diluted share, compared to $35.2
million, or $1.06 per diluted share, in 2011.
- Total backlog reached a new high of
$380.6 million at December 31, 2012, up 12.0 percent from $339.8
million at December 31, 2011. Software-related backlog (excluding
appraisal services) was $350.6 million, an increase of 9.6 percent
compared to $319.9 million at December 31, 2011.
“We achieved solid results for the fourth quarter. Quarterly
revenues reached a new high, with double-digit organic growth
complemented by recent acquisitions,” said John S. Marr Jr.,
Tyler’s president and chief executive officer. “Recurring revenues
continued to drive our growth. Subscription revenue increased
approximately 43 percent from last year’s fourth quarter,
reflecting increased adoption of our SaaS model as well as greater
transaction-based revenues from our electronic filing solution for
courts. During the fourth quarter we signed subscription-based
agreements with 29 new software clients.
“We enter the new year with a strong balance sheet, a record
backlog level, and an excellent competitive position coupled with a
market environment that appears to be continuing to gradually
improve,” said Mr. Marr. “Our guidance reflects our expectation
that current business trends will continue in 2013,” continued Mr.
Marr.
“Our guidance also includes costs of significant investments in
our business that we believe will enhance our market leadership and
improve long-term revenue and margin growth. These investments
include expenses associated with the implementation of new
electronic filing contracts, including our TexFile contract to
provide a statewide e-filing system for Texas courts. The Texas
Supreme Court recently issued an order mandating e-filing in civil
cases, with a phase-in beginning January 2014, that we expect will
significantly increase our transaction volumes and revenues from
that contract. In addition, we plan to accelerate hiring in 2013 to
ensure that we are well-positioned to deliver our current backlog
and anticipated new business.”
Guidance for 2013
As of February 6, 2013, Tyler Technologies is providing the
following guidance for the full year 2013:
- Tyler expects total revenues for 2013
to be in the range of $409 million to $418 million.
- Tyler expects 2013 diluted earnings per
share to be approximately $1.06 to $1.14.
- Tyler expects 2013 non-GAAP diluted
earnings per share to be approximately $1.42 to $1.50.
- Tyler expects pretax non-cash,
share-based compensation expense to be approximately $10.5
million.
- Tyler expects that its effective tax
rate for 2013 will be approximately 40.0 percent.
- Tyler expects that capital expenditures
for the year will be between $23.0 million and $24.0 million,
including approximately $14.8 million related to real estate, and
that total depreciation and amortization expense is expected to be
between $14.2 million and $14.7 million, including approximately
$6.5 million of amortization of acquisition intangibles.
Conference Call
Tyler Technologies will hold a conference call on Thursday,
February 7, at 10:00 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 10021871 when prompted. A replay will be
available two hours after the completion of the call through
February 14, 2013. To access the replay, please dial 877-344-7529
(U.S. callers) and 412-317-0088 (international callers) and
reference passcode 10021871. The live webcast and archived replay
can also be accessed in the Investor section of Tyler’s website at
www.tylertech.com.
About Tyler Technologies, Inc.
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. Tyler’s client base includes more than
11,000 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” five times in the last six years.
More information about Dallas-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
operating income, non-GAAP net income, non-GAAP diluted earnings
per share, non-GAAP gross margin, non-GAAP operating margin, 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 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 31, Twelve Months Ended December 31,
2012 2011
2012 2011 Revenues: Software licenses
$ 8,732 $ 9,833
$ 33,172 $ 32,594
Subscriptions
12,762 8,930
44,618 31,160 Software
services
21,042 17,217
83,408 69,617 Maintenance
45,489 38,919
171,851 146,498 Appraisal services
5,496 5,283
22,543 23,228 Hardware and other
1,847 1,897
7,712 6,294 Total
revenues
95,368 82,079
363,304 309,391 Cost of
revenues: Software licenses
475 714
1,983 3,034
Acquired software
518 343
1,888 1,125 Software
services, maintenance and subscriptions
45,168 37,405
171,584 143,776 Appraisal services
3,619 3,248
14,889 14,550 Hardware and other
948
1,349
5,258 4,994 Total cost of revenues
50,728 43,059
195,602 167,479 Gross profit
44,640 39,020
167,702 141,912 Selling, general
and administrative expenses
22,763 21,141
86,706
75,650 Research and development expense
5,365 2,634
20,140 16,414 Amortization of customer and trade name
intangibles
1,093 923
4,279
3,331 Operating income
15,419 14,322
56,577
46,517 Other expense, net
384 818
2,709 2,404 Income before income taxes
15,035
13,504
53,868 44,113 Income tax provision
5,659 4,805
20,874 16,556 Net
income
$ 9,376 $ 8,699
$ 32,994 $
27,557 Earnings per common share: Basic
$ 0.30 $ 0.29
$ 1.09 $ 0.88 Diluted
$ 0.28 $ 0.27
$ 1.00 $ 0.83
Weighted average common shares outstanding: Basic
30,779 29,823
30,327 31,267 Diluted
33,421
32,031
32,916 33,154
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,
2012 2011
2012 2011 Reconciliation
of non-GAAP gross profit and margin GAAP gross profit
$
44,640 $ 39,020
$ 167,702 $ 141,912 Non-GAAP
adjustments: Add: Share-based compensation expense included in cost
of revenues
293 222
1,084 871 Add: Amortization of
acquired software
518 343
1,888 1,125 Non-GAAP gross profit
$ 45,451 $ 39,585
$
170,674 $ 143,908 Non-GAAP gross margin
47.7 % 48.2 %
47.0
% 46.5 % Reconciliation of non-GAAP
operating income and margin GAAP operating income
$
15,419 $ 14,322
$ 56,577 $ 46,517 Non-GAAP
adjustments: Add: Share-based compensation expense
1,905
1,668
7,411 6,253 Add: Amortization of acquired software
518 343
1,888 1,125 Add: Amortization of customer and
trade name intangibles
1,093 923
4,279 3,331 Non-GAAP adjustments
subtotal
$ 3,516 $ 2,934
$
13,578 $ 10,709 Non-GAAP operating income
$ 18,935 $ 17,256
$
70,155 $ 57,226 Non-GAAP operating
margin
19.9 % 21.0 %
19.3
% 18.5 % Reconciliation of non-GAAP net
income and earnings per share GAAP net income
$ 9,376
$ 8,699
$ 32,994 $ 27,557 Non-GAAP adjustments: Add:
Total non-GAAP adjustments affecting operating income
3,516
2,934
13,578 10,709 Less: Tax impact related to non-GAAP
adjustments
(1,101 ) (882 )
(4,198 ) (3,087 ) Non-GAAP net income
$
11,791 $ 10,751
$ 42,374
$ 35,179 Non-GAAP earnings per diluted share
$
0.35 $ 0.34
$ 1.29 $ 1.06
Detail of share-based compensation expense
Cost of software services, maintenance and subscriptions
$
293 $ 222
$ 1,084 $ 871 Selling, general and
administrative expenses
1,612 1,446
6,327 5,382 Total
share-based compensation expense
$ 1,905 $
1,668
$ 7,411 $ 6,253
Reconciliation of adjusted EBITDA GAAP net income
$
9,376 $ 8,699
$ 32,994 $ 27,557 Amortization
of customer and trade name intangibles
1,093 923
4,279 3,331 Depreciation and other amortization included in
cost of revenues, SG&A and other expenses
2,002 1,975
8,432 7,345 Interest expense included in other expense, net
310 707
2,064 1,892 Income tax provision
5,659 4,805
20,874
16,556 EBITDA
$ 18,440 $ 17,109
$ 68,643 $ 56,681 Share-based
compensation expense
1,905 1,668
7,411 6,253 Adjusted EBITDA
$ 20,345 $ 18,777
$
76,054 $ 62,934 TYLER
TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts
in thousands) (Unaudited)
December
31, December 31,
2012 2011 ASSETS Current assets:
Cash and cash equivalents
$ 6,406 $ 1,326 Short-term
investments available-for-sale
- 25 Accounts receivable, net
100,327 90,012 Other current assets
10,480 10,634
Deferred income taxes
5,544 5,095 Total
current assets
122,757 107,092 Accounts receivable,
long-term portion
1,187 2,095 Property and equipment, net
45,381 40,915 Non-current investments available-for-sale
2,037 1,953 Other assets: Goodwill and other
intangibles, net
165,756 141,722 Other
1,197
1,614 Total assets
$ 338,315 $ 295,391
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued liabilities
$
29,245 $ 27,962 Deferred revenue
140,550 123,678 Total current
liabilities
169,795 151,640 Revolving line of credit
18,000 60,700 Deferred income taxes
5,221 4,941
Shareholders' equity
145,299 78,110
Total liabilities and shareholders' equity
$ 338,315
$ 295,391 TYLER TECHNOLOGIES, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Three months ended December 31,
Twelve months ended December 31,
2012 2011
2012 2011
Cash flows from operating activities: Net income
$
9,376 $ 8,699
$ 32,994 $ 27,557 Adjustments to
reconcile net income to net cash provided by operations:
Depreciation and amortization
3,095 2,898
12,711
10,676 Share-based compensation expense
1,905 1,668
7,411 6,253 Provision for losses-accounts receivable
961 805
961 805 Excess tax benefit from exercise of
share-based arrangements
(5,481 ) (1,869 )
(8,764 ) (3,590 ) Deferred income taxes
(215
) (2,916 )
(215 ) (2,916 ) Changes in
operating assets and liabilities, exclusive of effects of acquired
companies
6,773 2,045
13,570 17,650 Net cash provided by
operating activities
16,414 11,330
58,668 56,435 Cash
flows from investing activities: Proceeds from sales of investments
- -
75 50 Cost of acquisitions, net of cash acquired
(10,451 ) (17,298 )
(25,680 ) (17,298 )
Additions to property and equipment
(2,751 ) (2,352 )
(9,102 ) (12,278 ) (Increase) decrease in other
(70 ) 518
(29
) 717 Net cash used by investing activities
(13,272 ) (19,132 )
(34,736 ) (28,809 ) Cash flows from
financing activities: (Decrease) increase in net borrowings on
revolving line of credit
(10,000 ) 2,700
(42,700 ) 34,200 Purchase of treasury shares
-
(3,277 )
- (71,802 ) Contributions from employee stock
purchase plan
809 573
2,641 2,045 Proceeds from
exercise of stock options
6,871 1,983
12,443 3,553
Excess tax benefit from exercise of share-based arrangements
5,481 1,869
8,764
3,590 Net cash provided (used) by financing
activities
3,161 3,848
(18,852 ) (28,414 ) Net increase
(decrease) in cash and cash equivalents
6,303 (3,954 )
5,080 (788 ) Cash and cash equivalents at beginning of
period
103 5,280
1,326 2,114 Cash and cash
equivalents at end of period
$ 6,406 $ 1,326
$ 6,406 $ 1,326
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