Marr to become chairman of the board
Tyler Technologies, Inc. (NYSE: TYL) today announced financial
results for the third quarter ended September 30, 2016. The company
also announced the upcoming retirement of board chair John Yeaman
and related executive promotions.
Third Quarter 2016 Financial Highlights:
- Total revenue was $194.5 million, up
28.9 percent from $150.8 million for the third quarter of 2015.
Organic growth was 10.8 percent.
- Recurring revenue from maintenance and
subscriptions was $119.9 million, an increase of 33.1 percent
compared to the third quarter of 2015, and comprised 61.6 percent
of third quarter 2016 revenue.
- Operating income was $36.9 million, an
increase of 17.3 percent from $31.5 million for the third quarter
of 2015.
- Net income was $22.3 million, or $0.58
per diluted share, up 10.5 percent compared to $20.1 million, or
$0.55 per diluted share, for the third quarter of 2015.
- Cash flows from operations were $67.1
million compared to $55.1 million for the third quarter of
2015.
- Non-GAAP total revenue was $197.8
million, up 31.1 percent from $150.8 million for the third quarter
of 2015.
- Non-GAAP operating income was $57.4
million, up 46.0 percent from $39.3 million for the third quarter
of 2015.
- Non-GAAP net income was $36.1 million,
or $0.94 per diluted share, up 40.9 percent compared to $25.6
million, or $0.71 per diluted share, for the third quarter of
2015.
- Adjusted EBITDA was $60.4 million, up
44.6 percent compared to $41.8 million for the third quarter of
2015.
- Total backlog was $935.6 million, up
23.5 percent from $757.7 million at September 30, 2015.
Software-related backlog (excluding appraisal services) was $892.1
million, an increase of 26.1 percent compared to $707.7 million at
September 30, 2015.
“Tyler achieved very solid revenue and earnings growth for the
third quarter, with greater than 20 percent growth in all of our
software revenue lines,” said John S. Marr Jr., Tyler’s president
and chief executive officer. “Total revenues grew 29 percent, with
nearly 11 percent organic growth. Our cloud business continued to
exhibit strength, increasing 27 percent over the prior year, of
which 23 percent was organic. Third quarter cash provided by
operations was $67 million, a new quarterly high. Year-to-date, we
have generated over $121 million in cash from operations, exceeding
the total for all of 2015.
“Bookings in the third quarter were the highest in company
history at $266 million, up 43 percent over the prior year.
Bookings include a four-year extension of our eFileTexas agreement
with the Texas Office of Court Administration valued at
approximately $72 million. Backlog also reached a new high of $936
million. In addition, we are pleased with our progress on the
integration of New World Systems, as well as New World’s revenue
and earnings contributions that continue to meet or exceed our
expectations set at the beginning of the year,” said Marr.
Guidance for 2016
As of October 26, 2016, Tyler Technologies is providing the
following guidance for the full year 2016:
- GAAP total revenues are expected to be
in the range of $755 million to $762 million.
- Non-GAAP total revenues are expected to
be in the range of $770 million to $777 million.
- GAAP diluted earnings per share are
expected to be approximately $2.01 to $2.07.
- Non-GAAP diluted earnings per share are
expected to be approximately $3.46 to $3.52.
- Pretax non-cash, share-based
compensation expense is expected to be approximately $29.5 million
to $30.5 million.
- Fully diluted shares for the year are
expected to be between 38.5 million and 39.0 million shares.
- The GAAP effective tax rate is expected
to be in the range of 38.0 percent to 39.0 percent. The non-GAAP
effective tax rate is expected to be in the range of 35.5 percent
to 36.5 percent. With the issuance of ASU No. 2016-09,
“Compensation – Stock Compensation (Topic 718)” on March 31, 2016,
which will require us to recognize the income tax effects of stock
option exercises in the income statement, both our GAAP and
non-GAAP effective tax rates could differ substantially from this
guidance. While we will adopt this standard in the fourth quarter
of 2016, we are currently unable to provide a reasonable estimate
regarding the financial impact.
- Capital expenditures are expected to be
between $40 million and $42 million, including approximately $21
million related to real estate. Total depreciation and amortization
expense is expected to be between $50 million and $51 million,
including approximately $36 million of amortization of acquisition
intangibles.
Executive Transitions and Promotions
Effective January 1, 2017, John S. Marr Jr. will become chairman
of the board of directors, with John Yeaman continuing his service
as a director until his retirement in May 2017. In addition, Donald
R. Brattain will become lead director. Marr will retain his title
as chief executive officer and is appointing H. Lynn Moore Jr. as
president, formalizing the strategic and consultative role that
Moore has played for several years.
Moore has been in a senior leadership role with the company
since 1998 and has served as executive vice president and general
counsel since 2008. He has played a significant role in major
strategic initiatives, including last year’s acquisition of New
World Systems Corporation. “Tyler’s direction reflects the
fundamentals Lynn and I share,” said Marr. “The way he looks at
Tyler’s future and the way I do are very similar. This move enables
us to continue and expand our focus on strategy and innovative
development while our strong division leadership continues to focus
on efficient performance and outstanding execution of our business
operations.”
Abigail Diaz has been appointed chief legal officer, also
effective January 1, 2017. Diaz joined the company in 2012 and
currently serves as vice president and associate general
counsel.
Conference Call
Tyler Technologies will hold a conference call on Thursday,
October 27, at 10:00 a.m. EDT 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/10093333. 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 October
27, 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 November 3, 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
10093333.
The live webcast and archived replay can also be accessed at
http://investors.tylertech.com/Presentations.
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 their constituents. 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. In
2016, Forbes ranked Tyler on their “Most Innovative Growth
Companies” list, and it has also named Tyler one of “America’s Best
Small Companies” eight times. 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, 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 because they provide additional insight in
comparing results from period to period. 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.
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 September 30, Nine Months Ended September
30,
2016 2015
2016 2015 Revenues: Software licenses
and royalties
$ 19,930 $ 15,690
$
54,331 $ 44,576 Subscriptions
36,869 29,036
104,926 81,273 Software services
44,738 36,398
133,208 101,765 Maintenance
83,000 61,018
237,775 177,829 Appraisal services
6,541 6,557
20,083 19,337 Hardware and other
3,419
2,146
12,439 7,326 Total
revenues
194,497 150,845
562,762 432,106 Cost
of revenues: Software licenses and royalties
623 147
1,927 1,183 Acquired software
5,598 552
16,737
1,464 Software services, maintenance and subscriptions
88,623 72,764
260,610 207,819 Appraisal services
4,053 3,984
12,473 12,397 Hardware and other
2,120 1,565
8,481
5,278 Total cost of revenues
101,017 79,012
300,228
228,141 Gross profit
93,480 71,833
262,534
203,965 Selling, general and administrative expenses
42,007 31,869
124,998 90,810 Research and development
expense
11,070 7,193
31,362 21,307 Amortization of
customer and trade name intangibles
3,458
1,282
10,273 3,585 Operating
income
36,945 31,489
95,901 88,263 Other (expense)
income, net
(526 ) 255
(1,713 ) 621 Income before income taxes
36,419 31,744
94,188 88,884 Income tax provision
14,155 11,602
35,973
32,633 Net income
$ 22,264 $
20,142
$ 58,215 $ 56,251
Earnings per common share: Basic
$ 0.61 $ 0.59
$ 1.60 $ 1.66 Diluted
$ 0.58
$ 0.55
$ 1.51 $ 1.56 Weighted
average common shares outstanding: Basic
36,433 33,900
36,438 33,787 Diluted
38,506 36,349
38,477
36,163 TYLER TECHNOLOGIES, INC. RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES (Amounts in thousands, except
per share data) (Unaudited)
Three Months Ended September 30, Nine
Months Ended September 30,
2016 2015
2016 2015
Reconciliation of non-GAAP total revenues GAAP total revenues
$ 194,497 $ 150,845
$ 562,762 $ 432,106
Non-GAAP adjustments: Add: Write-downs of acquisition-related
deferred revenue
3,149 -
13,399 - Add: Amortization
of acquired leases
111 -
333 - Non-GAAP total revenues
$
197,757 $ 150,845
$ 576,494
$ 432,106 Reconciliation of non-GAAP
gross profit and margin GAAP gross profit
$ 93,480 $
71,833
$ 262,534 $ 203,965 Non-GAAP adjustments: Add:
Write-downs of acquisition-related deferred revenue
3,149 -
13,399 - Add: Amortization of acquired leases
111 -
333 - Add: Share-based compensation expense included in cost
of revenues
1,779 902
4,667 2,349 Add: Amortization
of acquired software
5,598 552
16,737 1,464 Non-GAAP gross
profit
$ 104,117 $ 73,287
$
297,670 $ 207,778 GAAP gross margin
48.1 % 47.6 %
46.7 %
47.2 % Non-GAAP gross margin
52.6 %
48.6 %
51.6 % 48.1 %
Reconciliation of non-GAAP operating income and margin GAAP
operating income
$ 36,945 $ 31,489
$
95,901 $ 88,263 Non-GAAP adjustments: Add: Write-downs of
acquisition-related deferred revenue
3,149 -
13,399 -
Add: Amortization of acquired leases
111 -
333 - Add:
Share-based compensation expense
7,656 5,598
21,348
14,459 Add: Employer portion of payroll tax related to employee
stock transactions
498 60
690 333 Add:
Acquisition-related costs
- 342
- 342 Add:
Amortization of acquired software
5,598 552
16,737
1,464 Add: Amortization of customer and trade name intangibles
3,458 1,282
10,273
3,585 Non-GAAP adjustments subtotal
$
20,470 $ 7,834
$ 62,780 $
20,183 Non-GAAP operating income
$ 57,415
$ 39,323
$ 158,681 $ 108,446
GAAP operating margin
19.0 %
20.9 %
17.0 % 20.4 % Non-GAAP operating
margin
29.0 % 26.1 %
27.5
% 25.1 % Reconciliation of non-GAAP net
income and earnings per share GAAP net income
$
22,264 $ 20,142
$ 58,215 $ 56,251 Non-GAAP
adjustments: Add: Total non-GAAP adjustments to operating income
20,470 7,834
62,780 20,183 Less: Tax impact related
to non-GAAP adjustments
(6,613 ) (2,334
)
(20,377 ) (6,147 ) Non-GAAP net
income
$ 36,121 $ 25,642
$
100,618 $ 70,287 GAAP earnings per diluted
share
$ 0.58 $ 0.55
$
1.51 $ 1.56 Non-GAAP earnings per diluted
share
$ 0.94 $ 0.71
$
2.62 $ 1.94 Detail of
share-based compensation expense Cost of software services,
maintenance and subscriptions
$ 1,779 $ 902
$
4,667 $ 2,349 Selling, general and administrative expenses
5,877 4,696
16,681
12,110 Total share-based compensation expense
$ 7,656 $ 5,598
$ 21,348
$ 14,459 TYLER TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Amounts in
thousands, except per share data) (Unaudited)
Three Months Ended
September 30, Nine Months Ended September 30,
2016 2015
2016 2015 Reconciliation of EBITDA and adjusted EBITDA GAAP
net income
$ 22,264 $ 20,142
$ 58,215 $
56,251 Amortization of customer and trade name intangibles
3,458 1,282
10,273 3,585
Depreciation and other amortization
included in cost of revenues, SG&A and other expenses
9,213 2,820
27,248 8,001 Interest expense included in
other expense, net
508 -
1,695 - Income tax provision
14,155 11,602
35,973
32,633 EBITDA
$ 49,598 $ 35,846
$
133,404 $ 100,470 Write-downs of acquisition-related
deferred revenue
3,149 -
13,399 - Acquisition-related
costs
- 342
- 342 Share-based compensation expense
7,656 5,598
21,348 14,459
Adjusted EBITDA
$ 60,403 $ 41,786
$
168,151 $ 115,271 TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
September 30, December 31,
2016
2015
(Unaudited) ASSETS Current assets: Cash
and cash equivalents
$ 23,314 $ 33,087 Accounts
receivable, net
188,429 176,360 Current investments and
other assets
47,904 37,688 Income tax receivable
17,680 21,080 Total current assets
277,327
268,215 Accounts receivable, long-term portion
2,744
2,777 Property and equipment, net
120,963 101,112
Other assets: Goodwill
647,525 653,666 Other intangibles,
net
276,326 295,378 Non-current investments and other assets
27,881 35,422 Total assets
$
1,352,766 $ 1,356,570 LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Accounts payable
and accrued liabilities
$ 60,176 $ 55,945 Deferred
revenue
288,316
281,627 Total current liabilities
348,492
337,572 Revolving line of credit
34,000 66,000
Deferred revenue, long-term
2,924 3,115 Deferred income
taxes
85,095 91,026 Shareholders' equity
882,255 858,857 Total liabilities and
shareholders' equity
$ 1,352,766 $ 1,356,570
TYLER TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (Amounts in thousands) (Unaudited)
Three Months Ended
September 30, Nine Months Ended September 30,
2016 2015
2016 2015 Cash flows from operating activities: Net income
$ 22,264 $ 20,142
$ 58,215 $ 56,251
Adjustments to reconcile net income to cash provided (used) by
operations: Depreciation and amortization
12,671 4,102
37,521 11,586 Share-based compensation expense
7,656
5,598
21,348 14,459 Excess tax benefit from exercise of
share-based arrangements
(12,122 ) (1,974 )
(18,816 ) (10,801 ) Deferred income tax (benefit)
expense
(11,716 ) 139
(11,289 ) 643
Changes in operating assets and liabilities, exclusive of effects
of acquired companies
48,338 27,093
34,259 (2,225 ) Net cash
provided by operating activities
67,091
55,100
121,238 69,913
Cash flows from investing activities: Additions to property
and equipment
(7,570 ) (2,399 )
(29,529
) (8,525 ) Purchase of marketable security investments
(2,520 ) (22,942 )
(13,127 ) (29,391 )
Proceeds from marketable security investments
2,730 -
9,256 - Cost of acquisitions, net of cash acquired
-
-
(9,394 ) (6,447 ) Investment in Record Holdings Pty
Limited
- -
- (15,000 ) Decrease (increase) in other
229 14
(52
) 5 Net cash used by investing activities
(7,131 ) (25,327 )
(42,846 ) (59,358 ) Cash flows from
financing activities: Decrease in net borrowings on revolving line
of credit
(101,000 ) -
(32,000 ) -
Purchase of treasury shares
(2 ) -
(94,499
) (645 ) Proceeds from exercise of stock options
9,296 1,640
15,089 8,369 Contributions from employee
stock purchase plan
1,611 1,124
4,429 3,367 Excess
tax benefit from exercise of share-based arrangements
12,122 1,974
18,816
10,801 Net cash (used) provided by financing
activities
(77,973 ) 4,738
(88,165 ) 21,892 Net
(decrease) increase in cash and cash equivalents
(18,013
) 34,511
(9,773 ) 32,447 Cash and cash
equivalents at beginning of period
41,327
204,103
33,087 206,167
Cash and cash equivalents at end of period
$
23,314 $ 238,614
$ 23,314
$ 238,614
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161026006768/en/
Tyler Technologies, Inc.Brian K. Miller, 972-713-3720Executive
Vice President - CFObrian.miller@tylertech.com
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