Forbes recognizes Company’s exceptional
financial performance
NIC Inc. (NASDAQ: EGOV), the dominant provider of eGovernment
services, today announced net income of $5.1 million and earnings
per share of 8 cents on total revenues of $61.3 million for the
three months ended September 30, 2013. As previously announced,
results for the current quarter include a one-time, non-cash
pre-tax charge of approximately $5.1 million (approximately 5 cents
per share on an after-tax basis) included in cost of portal
revenues to write off outstanding accounts receivable due from the
Commonwealth of Pennsylvania. Current quarter operating income
decreased 22 percent from the prior year quarter, reflecting the
one-time charge. In the third quarter of 2012, the Company reported
net income of $6.0 million and earnings per share of 9 cents on
total revenues of $53.2 million.
On October 28, 2013, NIC’s Board of Directors declared a special
cash dividend of $0.35 per share, payable on January 2, 2014 to
stockholders of record on November 8, 2013. The dividend payout
will total approximately $23.0 million based on the current number
of shares outstanding.
Quarterly portal revenues were $57.7 million, a 15 percent
increase over third quarter 2012. On a same-state basis, portal
revenues were up 15 percent in the current quarter. Same-state,
transaction-based revenues from non-driver record (non-DMV)
services rose 28 percent over third quarter 2012 through continued
strong performance from the Texas motor vehicle inspection service
as part of the DPS Direct suite of services, a court fee payment
service in Colorado, and several eGovernment services in New
Jersey. Same-state DMV revenues increased 5 percent in the third
quarter of 2013.
Current quarter revenues from the Company’s newest portal in
Wisconsin totaled $0.4 million. The Company did not recognize any
revenues in the current quarter from its Pennsylvania portal.
“Our focus on the long-term success of the Company continues to
produce solid financial results for NIC,” said NIC Chief Executive
Officer Harry Herington. “There are times when we must make tough
decisions in the short-term, but we know they are the right
decisions to make and will fuel our success in the future – whether
that results in maintaining strong partnerships or national
recognition like what we recently received from Forbes.”
NIC’s portal gross profit percentage was 31 percent in the
current quarter, down from 37 percent in the prior year quarter,
reflecting the one-time $5.1 million charge in Pennsylvania and
$2.0 million of start-up costs from the Wisconsin and Pennsylvania
portals.
Selling & administrative expenses in the current quarter
increased 26 percent, or $2.2 million, from the third quarter of
2012. As a percentage of total revenues, selling &
administrative expenses were 17 percent in the current quarter,
compared to 15 percent in the prior year quarter. The
current quarter increase in selling & administrative expenses
was primarily attributable to higher costs to enhance
corporate-wide information technology and security infrastructure
as a result of the Company’s growth, and higher executive and
non-executive management incentive compensation and benefit
costs.
In addition, the Company incurred approximately $3.5 million in
legal fees and other third-party costs in the third quarter of 2013
in connection with the previously disclosed SEC investigation and
related matters. These expenses were reduced by approximately $2.8
million of reimbursement by the Company’s directors’ and officers’
liability insurance carrier, resulting in a net expense of
approximately $0.7 million in the current quarter. Selling &
administrative expenses in the prior year quarter included
approximately $1.1 million of expenses related to the SEC matter,
which were reduced by approximately $1.0 million of insurance
reimbursement by the Company’s insurance carrier, resulting in a
net expense of approximately $0.1 million in the prior year
quarter.
“Despite the one-time charge in Pennsylvania, we were quite
pleased with our results for the quarter, particularly our strong
organic revenue growth,” said Steve Kovzan, NIC’s Chief Financial
Officer. “The lifeblood of our business will always be the
thousands of online services that make government interactions more
efficient and secure “
Operational Highlights
In October 2013, Forbes announced its annual rankings of the
“100 Best Small Companies in America” with annual revenues between
$5 million and $1 billion. NIC achieved its highest ranking in the
Company’s history, placing 11th on the list. This is the fifth
consecutive year that NIC has received this national recognition,
and NIC remains the only publicly traded company headquartered in
the state of Kansas to make the list. Criteria included earnings
growth, sales growth, and return on equity in the past 12 months
and over five years, as well as stock performance.
The Company also was notified recently that it has been included
in the Barron’s 400 Index, which selects the top 6 percent of all
publicly traded companies in North America based on strong
financial performance. This is the second consecutive year that NIC
has been included in the index, placing it in an exclusive group of
only 1.5 percent of all companies in North America to achieve the
ranking two years in a row.
Also during the third quarter, the state of Maine signed a
two-year renewal extension, taking its contract through 2016.
Third Quarter Earnings Call and Webcast Details
On the call, the Company will discuss its 2013 third quarter,
and answer questions from the investment community. The call may
also include discussion of company developments, and
forward-looking and other material information about business and
financial matters.
Dial-In Information
Thursday, November 7, 2013 4:30 p.m. (EST)
Call bridge: 866-225-8754 (U.S. callers) or 480-629-9818
(international callers) Call leaders: Harry Herington, Chief
Executive Officer and Chairman of the Board Steve Kovzan, Chief
Financial Officer Robert Knapp, Chief Operating Officer
Webcast Information
To sign in and listen: The Webcast system is available at
http://www.egov.com/investors.
A replay of the Webcast will be available until 11 p.m. (EDT) on
May 8, 2014, by visiting http://www.egov.com/investors.
About NIC
NIC Inc. (NASDAQ: EGOV) is the leading provider of
enterprise-wide, official state eGovernment services and secure
government payment processing solutions. The Company's innovative
eGovernment services help reduce costs and increase efficiencies
for government agencies, citizens, and businesses across the
country. The NIC family of companies provides eGovernment solutions
for more than 3,500 federal, state, and local agencies across the
United States. Additional information is available at http://www.egov.com.
Cautionary Statement Regarding Forward-Looking
Information
Any statements contained in this release that do not relate to
historical or current facts constitute forward-looking statements.
These statements include statements regarding the Company’s
potential financial performance for the current fiscal year,
statements regarding the planned implementation of new portal
contracts and statements regarding continued implementation of
NIC’s business model and its development of new products and
services. Forward-looking statements are subject to inherent risks
and uncertainties and there can be no assurance that such
statements will prove to be correct. There are a number of
important factors that could cause actual results to differ
materially from those suggested or indicated by such
forward-looking statements. These include, among others, NIC’s
ability to successfully integrate into its operations recently
awarded eGovernment contracts; NIC's ability to implement its new
portal contracts in a timely and cost-effective manner; NIC’s
ability to successfully increase the adoption and use of
eGovernment services; the possibility of reductions in fees or
revenues as a result of budget deficits, government shutdowns or
changes in government policy; the success of the Company in
renewing existing contracts and in signing contracts with new
states and federal government agencies; continued favorable
government legislation; NIC’s ability to develop new services;
existing states and agencies adopting those new services;
acceptance of eGovernment services by businesses and citizens;
competition; the possibility of security breaches through cyber
attacks; legal fees and other expenses related to the SEC matter in
excess of directors’ and officers’ liability insurance policy
limits; general economic conditions; and the other important
cautionary statements and risk factors described in NIC's 2012
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 28, 2013 and in subsequent periodic reports
filed with the SEC. Any forward-looking statements made in this
release speak only as of the date of this release. NIC does not
intend to update these forward-looking statements and undertakes no
duty to any person to provide any such update under any
circumstances.
NIC
INC. FINANCIAL SUMMARY (UNAUDITED) Thousands
except per share amounts and percentages Three months
ended Nine months ended September 30,
September 30, 2013 2012
2013 2012
Revenues: Portal revenues $ 57,721 $ 50,198 $ 177,857 $ 144,952
Software & services revenues 3,609 3,008
10,635 8,979 Total revenues
61,330 53,206 188,492
153,931 Operating expenses: Cost of portal revenues,
exclusive of depreciation & amortization 39,755 31,794 107,416
91,095 Cost of software & services revenues, exclusive of
depreciation & amortization 928 1,079 3,220 3,045 Selling &
administrative 10,387 8,218 30,054 24,536 Amortization of
acquisition-related intangible assets - 53 - 214 Depreciation &
amortization 2,145 1,606 6,221
4,236 Total operating expenses 53,215
42,750 146,911 123,126
Operating income 8,115 10,456 41,581 30,805 Other income
(expense), net 4 - (17 )
(1 ) Income before income taxes 8,119 10,456 41,564 30,804 Income
tax provision 3,026 4,461 15,707
13,088 Net income $ 5,093 $ 5,995
$ 25,857 $ 17,716 Basic net income per
share $ 0.08 $ 0.09 $ 0.39 $ 0.27
Diluted net income per share $ 0.08 $ 0.09 $ 0.39
$ 0.27 Weighted average shares outstanding:
Basic 64,961 64,586 64,854
64,458 Diluted 64,969
64,604 64,861 64,475 Key
Financial Metrics: Revenue growth - outsourced portals 15 % 14 % 23
% 13 % Same state revenue growth - outsourced portals 15 % 8 % 17 %
7 % Recurring portal revenue as a % of total portal revenues 93 %
92 % 94 % 92 % Gross profit % - outsourced portals 31 % 37 % 40 %
37 % Revenue growth - software & services 20 % 6 % 18 % 14 %
Gross profit % - software & services 74 % 64 % 70 % 66 %
Selling & administrative expenses as a % of total revenues 17 %
15 % 16 % 16 % Operating income as a % of total revenue 13 % 20 %
22 % 20 % Portal Revenue Analysis: DMV transaction-based $
19,037 $ 18,575 $ 63,829 $ 53,691 Non-DMV transaction-based 32,197
25,290 96,372 71,900 Portal software development 3,922 3,955 9,961
12,283 Portal management 2,565 2,378
7,695 7,078 Total portal revenues $
57,721 $ 50,198 $ 177,857 $ 144,952
NIC INC. CONSOLIDATED BALANCE
SHEETS (UNAUDITED) Thousands except par value
amount September 30, 2013
December 31, 2012 ASSETS Current assets: Cash $
90,929 $ 62,358 Trade accounts receivable, net 61,045 55,261
Deferred income taxes, net 950 887 Prepaid expenses & other
current assets 12,217 9,340 Total current
assets 165,141 127,846 Property and equipment, net 14,182 16,025
Intangible assets, net 1,650 1,016 Other assets 259
253 Total assets $ 181,232 $ 145,140
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 45,847 $ 43,664 Accrued expenses 22,498 18,948
Other current liabilities 327 208 Total
current liabilities 68,672 62,820 Deferred income taxes, net
2,307 2,050 Other long-term liabilities 2,208 1,346
Total liabilities 73,187 66,216
Commitments and contingencies - - Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares authorized, 64,989 and
64,628 shares issued and outstanding 6 6 Additional paid-in capital
87,572 84,308 Retained earnings (accumulated deficit) 20,467
(5,390 ) Total stockholders' equity 108,045
78,924 Total liabilities and stockholders' equity $ 181,232
$ 145,140
NIC INC. CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Thousands Additional Common
Stock Paid-in Retained Earnings Shares
Amount Capital (Accumulated Deficit)
Total Balance, January 1, 2013 64,628 $ 6 $ 84,308 $
(5,390 ) $ 78,924 Net income - - - 25,857 25,857 Restricted stock
vestings 397 - 83 - 83 Dividend equivalents cancelled upon
forfeiture of performance-based restricted stock awards - - 50 - 50
Shares surrendered and cancelled upon vesting of restricted stock
to satisfy tax withholdings (124 ) - (2,242 ) - (2,242 )
Stock-based compensation - - 3,267 - 3,267 Tax deductions relating
to stock-based compensation - - 1,335 - 1,335 Shares issuable in
lieu of dividend payments on unvested performance-based restricted
stock awards - - (133 ) - (133 ) Issuance of common stock under
employee stock purchase plan 88 - 904
- 904
Balance, September 30,
2013 64,989 $ 6 $ 87,572 $ 20,467 $
108,045
NIC INC. CASH FLOW SUMMARY
(UNAUDITED) Thousands Three months
ended Nine months ended September 30,
September 30, 2013 2012
2013 2012
Cash flows from operating activities: Net income $ 5,093 $ 5,995 $
25,857 $ 17,716 Adjustments to reconcile net income to net cash
provided by operating activities: Amortization of
acquisition-related intangible assets - 53 - 214 Depreciation &
amortization 2,145 1,606 6,221 4,236 Provision for losses on
accounts receivable 5,086 77 5,125 157 Stock-based compensation
expense 1,190 1,252 3,267 3,109 Deferred income taxes (322 ) 1,544
(1,142 ) 1,080 Gain on disposal of property and equipment (4 ) - 17
1 Changes in operating assets and liabilities: (Increase) decrease
in trade accounts receivable, net 3,479 673 (10,909 ) (5,230 )
(Increase) in prepaid expenses & other current assets (4,674 )
(1,021 ) (1,541 ) (3,607 ) (Increase) in other assets (4 ) (6 ) (6
) (8 ) Increase (decrease) in accounts payable (2,373 ) (428 )
2,183 2,725 Increase in accrued expenses 2,975 1,664 1,303 1,162
Increase (decrease) in other current liabilities (1,061 ) (16 ) 119
(116 ) Increase (decrease) in other long-term liabilities
148 (40 ) 862 (113 ) Net cash
provided by operating activities 11,678 11,353
31,356 21,326 Cash flows from
investing activities: Purchases of property and equipment (1,687 )
(8,710 ) (3,945 ) (11,374 ) Capitalized internal use software
development costs (349 ) (201 ) (1,079 )
(550 ) Net cash used in investing activities (2,036 )
(8,911 ) (5,024 ) (11,924 ) Cash flows from
financing activities: Proceeds from employee common stock purchases
- - 904 806 Tax deductions related to stock-based compensation
599 427 1,335
1,197 Net cash provided by financing activities 599
427 2,239 2,003
Net increase in cash 10,241 2,869 28,571 11,405 Cash, beginning of
period 80,688 70,175 62,358
61,639 Cash, end of period $ 90,929 $
73,044 $ 90,929 $ 73,044 Other cash flow
information: Non-cash investing activities: Capital expenditures
accrued but not yet paid $ 5 $ 657 $ 5 $ 657 Cash payments: Income
taxes paid $ 6,550 $ 3,205 $ 12,744 $ 11,854 Cash dividends on
common stock previously restricted for payment of dividend $ - $ -
$ - $ 16,231
NIC Inc.Angela Davied, 913-754-7054adavied@egov.com
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