Quarterly adjusted EBITDA grew 31 percent
Tyler Technologies, Inc. (NYSE: TYL) today announced financial
results for the fourth quarter and year ended December 31,
2015.
Fourth Quarter 2015 Financial Highlights:
- Total revenue was $158.9 million, up
24.7 percent from $127.4 million for the fourth quarter of 2014.
Organic growth was 15.3 percent.
- Recurring revenue from maintenance and
subscriptions was $98.4 million, an increase of 23.7 percent
compared to the fourth quarter of 2014, and comprised 61.9 percent
of fourth quarter 2015 revenue.
- Operating income was $19.8 million, a
decrease of 19.6 percent from $24.6 million for the fourth quarter
of 2014. Results for the quarter were impacted by approximately
$5.5 million of acquisition-related expenses.
- Net income was $8.6 million, or $0.23
per diluted share, down 43.7 percent compared to $15.3 million, or
$0.43 per diluted share, for the fourth quarter of 2014. The
effective tax rate was 55.9 percent compared to 38.1 percent for
the fourth quarter of 2014.
- Cash flows from operations were $19.1
million, down 32.5 percent compared to $28.3 million for the fourth
quarter of 2014.
- Non-GAAP total revenue was $162.1
million, up 27.2 percent from $127.4 million for the fourth quarter
of 2014.
- Non-GAAP operating income was $40.7
million, up 33.5 percent from $30.5 million for the fourth quarter
of 2014.
- Adjusted EBITDA was $42.3 million, up
30.5 percent compared to $32.4 million for the fourth quarter of
2014.
- Non-GAAP net income was $22.4 million,
or $0.59 per diluted share, up 16.3 percent compared to $19.3
million, or $0.54 per diluted share, for the fourth quarter of
2014.
- Total backlog was $844.5 million, up
20.3 percent from $702.0 million at December 31, 2014.
Software-related backlog (excluding appraisal services) was $797.0
million, an increase of 21.2 percent compared to $657.3 million at
December 31, 2014.
- On November 16, 2015, Tyler acquired
all of the common stock of privately held New World Systems
Corporation (New World) for $360 million in cash and approximately
2.1 million shares of Tyler common stock. New World has more than
2,000 public sector customers and more than 470 employees. New
World’s operating results are included in Tyler’s consolidated
results from the date of acquisition.
Full Year 2015 Financial Highlights:
- Total revenue was $591.0 million, up
19.9 percent from $493.1 million in 2014. Organic growth was 16.7
percent.
- Recurring revenue from maintenance and
subscriptions was $357.5 million, an increase of 18.9 percent
compared to 2014, and comprised 60.5 percent of 2015 revenue.
- Royalty revenue from Microsoft
Dynamics® AX, which is included in software licenses and royalties,
was $3.4 million, up 12.4 percent compared to $3.0 million in
2014.
- Operating income was $108.0 million, an
increase of 13.9 percent from $94.8 million in 2014.
- Net income was $64.9 million, or $1.77
per diluted share, up 10.1 percent compared to $58.9 million, or
$1.66 per diluted share, in 2014. The effective tax rate was 40.2
percent compared to 37.6 percent in 2014.
- Cash flows from operations were $89.0
million, down 27.9 percent compared to $123.4 million in 2014.
- Non-GAAP total revenue was $594.2
million, up 20.5 percent from $493.1 million in 2014.
- Non-GAAP operating income was $149.2
million, up 28.0 percent from $116.6 million in 2014.
- Adjusted EBITDA was $157.5 million, up
26.8 percent compared to $124.3 million in 2014.
- Non-GAAP net income was $92.7 million,
or $2.54 per diluted share, up 25.2 percent compared to $74.0
million, or $2.09 per diluted share, in 2014.
“We are pleased with Tyler’s fourth quarter results, as we again
achieved organic growth greater than 15 percent,” said John S. Marr
Jr., Tyler’s president and chief executive officer. “New World’s
operations, which were included in our results for approximately
seven weeks of the fourth quarter of 2015, contributed $13 million
of non-GAAP revenue, and we expanded our non-GAAP operating margin
by 120 basis points to 25.1 percent.
“Our effective tax rate was significantly higher than expected
at 55.9 percent for the fourth quarter and 40.2 percent for the
year, as a high level of excess tax benefits related to stock
option exercises resulted in the limitation of certain tax
deductions. Our effective tax rate was also impacted by certain
non-deductible acquisition-related costs.
“The integration of New World is well underway. Our employees
and clients are enthusiastic about the addition of New World to the
Tyler family and the opportunities that the combination provides.
We appreciate the extraordinary efforts of our team of
professionals as they work to integrate our products and operations
while continuing to provide our clients with exceptional
service.
“Activity in the local government software market continues to
be good, and with the inclusion of New World, our backlog at
December 31 reached $845 million, a 20 percent increase from last
year. With our strong financial position and cash flow, we plan to
accelerate our investment in product development in 2016 with
expected R&D expense of more than $47 million. We believe that
increasing the investment in our products beyond our previously
planned level will better position us to continue to expand our
industry-leading position in the public sector software market over
the long term.”
Guidance for 2016
As of February 17, 2016, Tyler Technologies is providing the
following guidance for the full year 2016:
- GAAP total revenues are expected to be
in the range of $750 million to $765 million, and non-GAAP total
revenues are expected to be in range of $765 million to $780
million.
- GAAP diluted earnings per share are
expected to be approximately $1.90 to $2.02.
- Non-GAAP diluted earnings per share are
expected to be approximately $3.33 to $3.45.
- Pretax non-cash, share-based
compensation expense is expected to be approximately $30 million to
$31 million.
- Fully diluted shares for the year are
expected to be between 38.5 million and 39.5 million shares.
- The effective tax rate is expected to
be in the range of 38.0 percent to 39.5 percent.
- Capital expenditures are expected to be
between $31 million and $33 million, including approximately $10
million related to real estate. Total depreciation and amortization
expense is expected to be between $49 million and $50 million,
including approximately $36 million of amortization of acquisition
intangibles.
Conference Call
Tyler Technologies will hold a conference call on Thursday,
February 18, at 10:00 a.m. EST to discuss the company’s results.
The company is offering participants the opportunity to register in
advance for the conference through the following link:
http://dpregister.com/10078298. 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
18, 2016.
Participants who do not wish to pre-register for the call may
dial in using 844-861-5506 (U.S. callers) or 412-317-6587
(international callers), and ask for the “Tyler Technologies” call.
A replay will be available two hours after completion of the call
through February 24, 2016. To access the replay, please dial
877-344-7529 (U.S. callers), 412-317-0088 (international callers)
and 855-669-9658 (Canada callers) and reference passcode
10078298.
The live webcast and archived replay can also be accessed at
www.tylertech.com/investors.
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
14,000 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”
eight times and the company has been included six times on the
Barron’s 400 Index, a measure of the most promising companies in
America. More information about Tyler Technologies, headquartered
in Plano, Texas, 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
revenues, 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, adjusted EBITDA and
non-GAAP cash from operations. 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
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 write-downs of acquisition-related deferred revenue and
acquired leases, share-based compensation expense, employer portion
of payroll taxes on employee stock transactions,
acquisition-related costs, 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 clients, 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) our ability to achieve growth or operational synergies
through the integration of acquired businesses, while avoiding
unanticipated costs and disruptions to existing operations; (4)
material portions of our business require the Internet
infrastructure to be adequately maintained; (5) our ability to
achieve our financial forecasts due to various factors, including
project delays by our clients, reductions in transaction size,
fewer transactions, delays in delivery of new products or releases
or a decline in our renewal rates for service agreements; (6)
general economic, political and market conditions; (7)
technological and market risks associated with the development of
new products or services or of new versions of existing or acquired
products or services; (8) competition in the industry in which we
conduct business and the impact of competition on pricing, client
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,
2015
2014
2015 2014 Revenues:
Software licenses and royalties
$ 14,432 $ 12,524
$ 59,008 $ 49,065 Subscriptions
30,660 23,713
111,933 87,848 Software services
38,087 28,227
139,852 113,821 Maintenance
67,708 55,792
245,537 212,696 Appraisal services
5,728 5,705
25,065 21,802 Hardware and other
2,301
1,479
9,627 7,869
Total revenues
158,916 127,440
591,022 493,101 Cost of
revenues: Software licenses and royalties
449 461
1,632 1,900 Acquired software
2,976 485
4,440
1,858 Software services, maintenance and subscriptions
77,521 61,662
285,340 236,363 Appraisal services
3,525 3,544
15,922 14,284 Hardware and other
1,223 797
6,501 5,325
Total cost of revenues
85,694 66,949
313,835
259,730 Gross profit
73,222 60,491
277,187
233,371 Selling, general and administrative expenses
42,507 28,130
133,317 108,260 Research and
development expense
8,615 6,615
29,922 25,743
Amortization of customer and trade name intangibles
2,320 1,153
5,905 4,546
Operating income
19,780 24,593
108,043 94,822
Other (expense) income, net
(240 ) 167
381 (355 ) Income before income taxes
19,540 24,760
108,424 94,467 Income tax provision
10,922 9,443
43,555
35,527 Net income
$ 8,618 $
15,317
$ 64,869 $ 58,940
Earnings per common share: Basic
$ 0.24 $ 0.46
$ 1.90 $ 1.79 Diluted
$ 0.23
$ 0.43
$ 1.77 $ 1.66 Weighted
average common shares outstanding: Basic
35,334 33,275
34,137 33,011 Diluted
37,864 35,661
36,552
35,401 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,
2015 2014
2015
2014 Reconciliation of non-GAAP total revenues GAAP
total revenues
$ 158,916 $ 127,440
$
591,022 $ 493,101 Non-GAAP adjustments: Add: Write-downs of
acquisition-related deferred revenue
3,186 -
3,186 -
Add: Amortization of acquired leases
37
-
37 - Non-GAAP total
revenues
$ 162,139 $ 127,440
$
594,245 $ 493,101 Reconciliation
of non-GAAP gross profit and margin GAAP gross profit
$
73,222 $ 60,491
$ 277,187 $ 233,371 Non-GAAP
adjustments: Add: Write-downs of acquisition-related deferred
revenue
3,186 -
3,186 - Add: Amortization of acquired
leases
37 -
37 - Add: Share-based compensation
expense included in cost of revenues
1,031 582
3,380
2,177 Add: Amortization of acquired software
2,976
485
4,440 1,858
Non-GAAP gross profit
$ 80,452 $ 61,558
$ 288,230 $ 237,406
Non-GAAP gross margin
49.6 % 48.3 %
48.5 % 48.1 %
Reconciliation of non-GAAP operating income and margin GAAP
operating income
$ 19,780 $ 24,593
$
108,043 $ 94,822 Non-GAAP adjustments: Add: Write-downs of
acquisition-related deferred revenue
3,186 -
3,186 -
Add: Amortization of acquired leases
37 -
37 - Add:
Share-based compensation expense
5,723 3,932
20,182
14,819 Add: Employer portion of payroll tax related to employee
stock transactions
1,173 346
1,506 514 Add:
Acquisition-related costs
5,533 -
5,875 - Add:
Amortization of acquired software
2,976 485
4,440
1,858 Add: Amortization of customer and trade name intangibles
2,320 1,153
5,905
4,546 Non-GAAP adjustments subtotal
$
20,948 $ 5,916
$ 41,131 $
21,737 Non-GAAP operating income
$ 40,728
$ 30,509
$ 149,174 $ 116,559
Non-GAAP operating margin
25.1 %
23.9 %
25.1 % 23.6 %
Reconciliation of non-GAAP net income and earnings per share
GAAP net income
$ 8,618 $ 15,317
$
64,869 $ 58,940 Non-GAAP adjustments: Add: Total non-GAAP
adjustments to operating income
20,948 5,916
41,131
21,737 Less: Tax impact related to non-GAAP adjustments
(7,171 ) (1,972 )
(13,318
) (6,658 ) Non-GAAP net income
$ 22,395
$ 19,261
$ 92,682 $ 74,019
Non-GAAP earnings per diluted share
$
0.59 $ 0.54
$ 2.54 $ 2.09
Detail of share-based compensation expense
Cost of software services, maintenance and subscriptions
$
1,031 $ 582
$ 3,380 $ 2,177 Selling, general
and administrative expenses
4,692 3,350
16,802 12,642 Total
share-based compensation expense
$ 5,723 $
3,932
$ 20,182 $ 14,819
Reconciliation of adjusted EBITDA GAAP net income
$
8,618 $ 15,317
$ 64,869 $ 58,940 Amortization
of customer and trade name intangibles
2,320 1,153
5,905 4,546 Depreciation and other amortization included in
cost of revenues, SG&A and other expenses
5,668 2,518
13,669 10,061 Interest expense included in other expense,
net
292 12
292 374 Income tax provision
10,922 9,443
43,555
35,527 EBITDA
$ 27,820 $ 28,443
$ 128,290 $ 109,448 Write-downs of
acquisition-related deferred revenue
3,186 -
3,186 -
Share-based compensation expense
5,723 3,932
20,182
14,819 Acquisition-related costs
5,533
-
5,875 - Adjusted EBITDA
$ 42,262 $ 32,375
$
157,533 $ 124,267 Reconciliation
of non-GAAP net cash provided by operating activities GAAP net cash
provided by operating activities
$ 19,100 $ 28,306
$ 89,013 $ 123,437 Non-GAAP adjustments: Add:
Acquisition-related costs
5,533 -
5,875 - Non-GAAP net cash
provided by operating activities
$ 24,633 $
28,306
$ 94,888 $ 123,437
TYLER TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands) (Unaudited)
December 31, December 31,
2015 2014
ASSETS Current assets: Cash and cash equivalents
$
33,087 $ 206,167 Accounts receivable, net
176,360
112,660 Income tax receivable
21,080 19 Current investments
and other current assets
37,688 18,190 Total
current assets
268,215 337,036 Accounts receivable,
long-term
2,777 1,761 Property and equipment, net
101,112 65,910 Deferred income taxes
- 5,504 Other
assets: Goodwill
653,666 124,142 Other intangibles, net
295,378 34,722 Cost method investment
15,000 -
Non-current investments and other assets
20,422
737 Total assets
$ 1,356,570 $ 569,812
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued liabilities
$
55,945 $ 43,627 Deferred revenue
281,627 189,212 Total
current liabilities
337,572 232,839 Long-term debt
66,000 - Deferred revenue, long term
3,115 - Deferred
income taxes
91,026 - Shareholders' equity
858,857 336,973 Total liabilities and
shareholders' equity
$ 1,356,570 $ 569,812
TYLER TECHNOLOGIES, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
(Unaudited) Three Months Ended December 31, Twelve
Months Ended December 31,
2015 2014
2015 2014 Cash
flows from operating activities: Net income
$ 8,618 $ 15,317
$ 64,869 $ 58,940 Adjustments to reconcile net income to
cash provided by operations: Depreciation and amortization
7,988 3,669
19,574 14,605 Share-based compensation
expense
5,723 3,932
20,182 14,819 Provision for
losses-accounts receivable
1,756 1,897
1,756 1,897
Excess tax benefit from exercise of share-based arrangements
(34,513) (12,685)
(45,314) (19,402) Deferred income
tax benefit
(8,599) (3,804)
(7,956) (3,804) Changes
in operating assets and liabilities, exclusive of effects of
acquired companies
38,127 19,980
35,902 56,382 Net
cash provided by operating activities
19,100 28,306
89,013 123,437 Cash flows from investing activities:
Cost of acquisitions, net of cash acquired
(333,514) -
(339,961) (3,242) Purchase of cost method investment
- -
(15,000) - Purchase of market security
investments
(2,516) -
(31,907) - Proceeds from market
security investments
900 -
900 808 Additions to
property and equipment
(3,976) (1,306)
(12,501)
(9,343) Decrease in other
5 3
10 222 Net cash used by
investing activities
(339,101) (1,303)
(398,459)
(11,555) Cash flows from financing activities: Increase in
net borrowings on revolving line of credit
66,000 -
66,000 - Purchase of treasury shares
- -
(645)
(22,817) Contributions from employee stock purchase plan
1,304 1,107
4,671 4,144 Proceeds from exercise of
stock options
14,791 7,941
23,160 14,680 Debt
issuance costs
(2,134) -
(2,134) - Excess tax benefit
from exercise of share-based arrangements
34,513 12,685
45,314 19,402 Net cash provided by financing activities
114,474 21,733
136,366 15,409 Net (decrease)
increase in cash and cash equivalents
(205,527) 48,736
(173,080) 127,291 Cash and cash equivalents at beginning of
period
238,614 157,431
206,167 78,876 Cash and
cash equivalents at end of period
$ 33,087 $ 206,167
$
33,087 $ 206,167
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160217006592/en/
Tyler Technologies, Inc.Brian K. Miller, 972-713-3720Executive
Vice President - CFObrian.miller@tylertech.com
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