TYL Tyler Technologies Corp

Tyler Technologies Second Quarter 2004 Operating Income Increases 63%; Net Income Rises 50% on 22% Revenue Growth DALLAS, July 28 /PRNewswire-FirstCall/ -- Tyler Technologies, Inc. (NYSE:TYL) today reported that operating income for the quarter ended June 30, 2004 increased 63% compared with the same quarter of 2003, fueled by a 29% increase in software-related revenues (software licenses, software services and maintenance). Total revenues for the quarter ended June 30, 2004 increased 22% to $44.3 million from $36.1 million in the same period last year. Software- related revenues grew in the aggregate 29% for the quarter, while appraisal services revenues declined 4%. Tyler's results include the operations of Eden Systems, Inc. since its acquisition by Tyler in December 2003. Pro forma revenues, as if the acquisition of Eden had occurred as of the beginning of 2003, increased 12% from $39.4 million in the three months ended June 30, 2003. Operating income for the quarter ended June 30, 2004 was $5.0 million, compared with operating income of $3.1 million in the same quarter of 2003. Net income for the three months ended June 30, 2004 was $3.0 million, or $0.07 per diluted share. Net income for the quarter ended June 30, 2003 was $2.0 million, or $0.04 per share. Second quarter EBITDA, or earnings before interest, income taxes, depreciation and amortization, increased 51% to $7.8 million from $5.2 million in the second quarter of 2003. Revenues for the six months ended June 30, 2004 increased 25% to $85.7 million from $68.5 million in 2003. Pro forma revenues for the first half of 2004 increased 16% from $74.2 million in the first half of 2003. Operating income for the six months ended June 30, 2004 was $8.4 million, an increase of 74% compared to $4.8 million in 2003. Net income for the six months ended June 30, 2004 was $5.1 million, or $0.11 per diluted share. Excluding an after-tax realized gain in connection with the cash sale of Tyler's entire investment in H.T.E., Inc (HTE) in 2003, net income for the six months ended June 30, 2004 would have increased 65% from $3.1 million, or $0.07 per share, in the first six months of 2003. Including the after-tax realized gain of $16.2 million, or $0.35 per share, from the HTE investment, net income for the six months ended June 30, 2003 totaled $19.3 million, or $0.42 per diluted share. EBITDA for the six months ended June 30, 2004 was $14.1 million. Excluding the realized gain on the HTE investment in the first half of 2003, EBITDA in the first half of 2004 would have increased 55% over EBITDA of $9.1 million in the first half of 2003. EBITDA for the first six months of 2003, including the HTE gain of $23.2 million, totaled $32.3 million. Free cash flow for the second quarter of 2004 was $5.5 million (cash provided by operating activities of $7.3 million minus capital expenditures of $1.8 million). For the second quarter of 2003, free cash flow was $3.5 million (cash provided by operating activities of $5.6 million minus capital expenditures of 2.1 million). Tyler has no debt and had $35.2 million in cash, short-term investments, and certificates of deposit at June 30, 2004. "Tyler continued to show solid growth in both revenues and earnings in the second quarter, with exceptionally strong growth in our software revenues," said John S. Marr, Jr., Tyler's Chief Operating Officer. "We were pleased with our top-line growth, which included organic growth of approximately 11%. Expansion into new geographies and success in larger opportunities continue to be the primary drivers of internal growth. In addition, the Eden Systems acquisition contributed growth of approximately 11% in the second quarter." Mr. Marr added, "Tyler's overall gross margin for the second quarter increased slightly to 38.6% from 38.4% in the same quarter last year, primarily due to a continuation of the positive shift in our revenue mix toward more software-related revenues. In the second quarter of 2004, 79.8% of our total revenues were software-related, compared to 75.8% of our revenues in the same quarter of 2003. "Selling, general and administrative expenses declined to 25.8% of revenues in the current quarter from 27.8% in the same quarter last year. Operating income increased 63% from the second quarter of last year, and our operating margin grew to 11.3% from 8.5% last year. "Cash flow continued to be very solid this quarter," continued Mr. Marr. "In accordance with our plan, capital spending for software development declined from last year's level. In addition, we continued to repurchase our common stock on the open market under the existing Board authorization. During the second quarter, Tyler repurchased approximately 327,000 shares of common stock at an average cost of $8.95 per share. As of June 30, 2004, we have just under 1.5 million shares remaining under our current repurchase authorization. "Our guidance for the full year 2004 has not changed and our current outlook for the second half of the year is positive," added Mr. Marr. "We continue to expect that revenue growth for the year 2004 will be in the range of 20% to 24%, with approximately half of the growth coming from the acquisition of Eden Systems. Net earnings for the full year 2004 are expected to be in the range of $12 million to $13 million, with fully diluted earnings per share of $0.27 to $0.29. Tyler's effective income tax rate for 2004 is expected to be approximately 41%. In addition, we still expect that total capital expenditures in 2004 will be below 2003 expenditures, with capital spending in the range of $7.5 million to $8.0 million." Tyler Technologies will hold a conference call on Thursday, July 29 at 12:00 noon Eastern Time to discuss the Company's results. A live webcast of the call can be accessed on the Company's Web site at http://www.tylerworks.com/ . A replay will be available on Tyler's Web site following the conference call. Based in Dallas, Tyler Technologies is a leading provider of end-to-end information management solutions and services to local governments. Tyler partners with clients to make local government more accessible to the public, more responsive to needs of citizens, and more efficient. Tyler's client base includes more than 6,000 local government offices throughout all 50 states, Canada, Puerto Rico and the United Kingdom. More information about Tyler Technologies can be found on the World Wide Web at http://www.tylerworks.com/ . Tyler Technologies, Inc. has included in this press release "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning its business and operations. Tyler Technologies expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its expectations. These expectations and the related statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, changes in competition, changes in general economic conditions, changes in the budgets and regulatory environments of the Company's customers, risks associated with the development of new products and the enhancement of existing products, the ability to attract and retain qualified personnel, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. (Comparative results follow) TYLER TECHNOLOGIES, INC. CONDENSED CONSOLIDATED INCOME STATEMENTS (Amounts in thousands, except per share data) Three Months Six Months Ended Ended June 30, June 30, 2004 2003 2004 2003 Revenues: Software licenses $7,403 $6,157 $14,255 $11,617 Software services 13,274 9,541 24,876 17,247 Maintenance 14,657 11,698 28,238 22,633 Appraisal services 7,045 7,356 14,999 14,107 Hardware and other 1,884 1,383 3,357 2,856 Total revenues 44,263 36,135 85,725 68,460 Cost of revenues: Software licenses 2,229 1,519 4,246 3,063 Software services and maintenance 18,662 14,565 35,855 27,847 Appraisal services 4,895 5,139 11,227 9,887 Hardware and other 1,377 1,049 2,472 2,156 Total cost of revenues 27,163 22,272 53,800 42,953 Gross profit 17,100 13,863 31,925 25,507 Selling, general and administrative expenses 11,412 10,061 21,939 19,162 Amortization of acquisition intangibles 670 725 1,592 1,510 Operating income 5,018 3,077 8,394 4,835 Realized gain on sale of investment in H.T.E., Inc. --- --- --- 23,233 Other income, net 41 137 143 146 Income before income taxes 5,059 3,214 8,537 28,214 Income tax provision 2,084 1,233 3,471 8,937 Net income $2,975 $1,981 $5,066 $19,277 Earnings per common share: Basic $0.07 $0.05 $0.12 $0.43 Diluted $0.07 $0.04 $0.11 $0.42 EBITDA (A) $7,839 $5,204 $14,128 $32,349 Weighted average common shares outstanding: Basic 41,420 42,881 41,443 44,408 Diluted 44,803 44,796 44,931 46,259 (A) EBITDA consists of net income before interest, income taxes, depreciation and amortization. Although EBITDA is not a calculation in accordance with accounting principles generally accepted in the United States (GAAP), we believe that EBITDA is widely used as a measure of operating performance. Nevertheless, the measure should not be considered in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with GAAP. In addition, since all companies do not calculate EBITDA in the same manner, this measure may not be comparable to similarly titled measures reported by other companies. The following reconciles EBITDA to net income for the periods presented: Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Net income $2,975 $1,981 $5,066 $19,277 Amortization of acquisition intangibles 670 725 1,592 1,510 Depreciation and other amortization included in cost of revenues and selling, general and administrative expenses 2,197 1,402 4,176 2,771 Interest income, net included in other income, net (87) (137) (177) (146) Income tax provision 2,084 1,233 3,471 8,937 EBITDA (2003 includes $23,233 gross realized gain on sale of investment in H.T.E., Inc.) $7,839 $5,204 $14,128 $32,349 TYLER TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) June 30, 2004 December 31, (unaudited) 2003 ASSETS Current assets: Cash and cash equivalents $17,981 $10,268 Short-term investments available-for-sale 9,736 11,669 Accounts receivable, net 42,476 38,411 Other current assets 4,953 4,237 Deferred income taxes 1,536 1,536 Total current assets 76,682 66,121 Property and equipment, net 6,375 6,505 Other assets: Certificate of deposit 7,500 7,500 Goodwill and other intangibles, net 99,093 101,812 Other 292 314 Total assets $189,942 $182,252 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $56,469 $51,148 Deferred income taxes 13,182 13,182 Minority interest 36 15 Shareholders' equity 120,255 117,907 Total liabilities and shareholders' equity $189,942 $182,252 http://www.newscom.com/cgi-bin/prnh/20020416/TYLLOGO http://photoarchive.ap.org/ DATASOURCE: Tyler Technologies, Inc. CONTACT: Brian K. Miller, Vice President - Finance of Tyler Technologies, Inc., +1-972-713-3720, or Web site: http://www.tylerworks.com/ Company News On-Call: http://www.prnewswire.com/comp/118708.html

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