Company declares regular quarterly dividend of
8 cents per share
NIC Inc. (NASDAQ: EGOV), the leading provider of digital
government services, today announced net income of $10.8 million
and earnings per share of 16 cents on total revenues of $83.5
million for the three months ended December 31, 2017. In the fourth
quarter of 2016, the Company reported net income of $13.6 million
and earnings per share of 20 cents on total revenues of $78.3
million.
During the fourth quarter of 2017, the Company’s effective tax
rate was 38 percent, compared to 19 percent in the fourth quarter
of 2016. NIC’s effective tax rate in the current year quarter
reflects a one-time charge totaling approximately $0.3 million to
revalue the Company’s net deferred tax assets as of December 31,
2017 based on the anticipated reduction of NIC’s prospective
effective tax rate resulting from the Tax Cuts and Jobs Act of
2017, which was signed into law on December 22, 2017. This discrete
tax item reduced earnings per share in the current quarter by
approximately 1 cent. The Tax Act, among other changes, reduces the
statutory federal corporate income tax rate from 35 percent to 21
percent, and the Company will begin receiving the benefit of the
reduced rate starting January 1, 2018, which will be offset by
changes in certain deductions, most notably the elimination of the
domestic production activities deduction. Based on information
currently available, the Company currently expects its effective
tax rate, before any discrete items, to range from 24 to 25 percent
in 2018. These tax-related estimates may differ from actual results
due to change in interpretations of the Tax Act and assumptions
made by the Company, as well as guidance that may be issued and
actions the Company may take as a result of the Tax Act.
The lower effective tax rate in the prior year quarter was
primarily attributable to favorable benefits related to the
amendment of the Company’s fiscal 2014 and 2013 tax returns to
include the Section 199 domestic production activities deduction.
These discrete tax items increased earnings per share in the prior
year quarter by approximately 3 cents.
Fourth Quarter 2017 Performance
Fourth quarter 2017 portal revenues were $78.4 million, a 7
percent increase over the fourth quarter of 2016. On a same state
basis, portal revenues increased 6 percent over the prior year
quarter. Same state revenues from Interactive Government Services
(IGS) increased 13 percent over the prior year quarter, driven by a
variety of transaction-based services including vehicle
registrations and corporation filings, among others. Same state
transaction-based revenues from Driver History Record (DHR)
services were flat compared to the fourth quarter of 2016, while
same state software development revenues decreased 27 percent from
the prior year quarter, driven mainly by fewer time & materials
projects across various NIC portal states.
Fourth quarter 2017 revenues from Illinois, the Company’s newest
partnership, totaled $2.4 million in fixed-fee project revenues
from the delivery of the first phase of an enterprise licensing and
permitting platform. In the prior year quarter, revenues from the
legacy Tennessee portal contract totaled $1.5 million, while
revenues from the legacy Iowa portal contract totaled $0.2 million.
As previously announced, the Company’s contract with the state of
Tennessee expired on March 31, 2017, and the Company’s contract
with the state of Iowa expired on November 30, 2016.
Software & services revenues were $5.1 million, up 1 percent
from the fourth quarter of 2016, driven by an increase in
transactional revenues from the federal Pre-employment Screening
Program and other payment processing services.
NIC’s operating income increased 4 percent over the prior year
quarter to $17.4 million for the fourth quarter of 2017, and the
Company’s operating income margin was 21 percent in both the
current and prior year quarters.
On January 29, 2018, the Company’s Board of Directors declared a
regular quarterly cash dividend of 8 cents per share, payable to
stockholders of record as of March 6, 2018. The dividend, which is
expected to total approximately $5.4 million based on the current
number of shares outstanding, will be paid on March 20, 2018, out
of the Company’s available cash.
“We have a diversified portfolio of solutions that continued to
drive healthy revenue growth,” said NIC Chief Executive Officer and
Chairman of the Board Harry Herington. “I look forward to our focus
on innovation continuing to build that portfolio in the
future.”
Operational Highlights
During the fourth quarter, the state of Mississippi extended its
contract with the Company for an additional two years, taking the
agreement through December 2019. Recently, the state of Maryland
extended its contract with the Company ahead of schedule with a
one-year renewal taking the contract through August 2019.
In addition, the Company signed a new contract with Liens NC,
LLC, a coalition of title insurance underwriters in North Carolina,
to continue providing the online lien agent system, Liens NC, for
another six years through April 2023.
More National Park Service locations recently joined the
YourPassNow platform, including Yellowstone National Park,
Everglades National Park, and Whiskeytown National Recreation Area.
The National Park Service also signed a contract with the Company
to make YourPassNow available to any location that would like to
participate. The National Park Service currently manages 417 sites,
with 118 charging entrance fees.
Full-Year 2017 Performance
Fiscal year 2017 total revenues rose 6 percent over the prior
year to $336.5 million, and portal revenues grew 5 percent to
$311.4 million, exceeding the high end of the Company’s total
revenue and portal revenue guidance. Portal revenue growth in 2017
was driven by several IGS services, including vehicle registrations
and corporate business filings, among others. On a same state
basis, portal revenues were 6 percent higher than in 2016, with
same state IGS transactional revenues up 11 percent for the year,
and same state DHR revenues growing 1 percent. Same state time
& materials revenues relating to portal software development
decreased 29 percent for the year.
Software & services revenues for fiscal year 2017 were $25.2
million, up 20 percent from 2016, exceeding the high end of the
Company’s software & services revenue guidance. The increase in
software & services revenue was driven by an increase in
revenues from the federal Pre-employment Screening Program and
other payment processing services, and by a non-recurring spike in
revenues from the sale of lifetime Senior Passes in the third
quarter of 2017 through the YourPassNow digital park pass service,
managed by NIC on behalf of the National Park Service. Demand for
the lifetime Senior Pass increased significantly in July and August
of 2017 due to a pending legislative price increase that became
effective August 28, 2017.
Fiscal year 2017 operating income increased 1 percent to $78.3
million. NIC’s operating income margin was 23 percent for the year,
down from 24 percent in the prior year.
NIC earned 77 cents per share in 2017, down from 84 cents per
share in 2016, exceeding the high end of the Company’s 2017
earnings guidance of 72 cents per share. Results in 2017 include
discrete tax items related to excess tax benefits generated upon
the vesting of restricted stock awards, an increase in the
previously estimated research and development tax credit for the
2016 and 2017 tax years, a release of reserves for unrecognized
income tax benefits due to the expiration of statutes of
limitations for certain tax years, and the aforementioned one-time
charge to revalue the Company’s net deferred tax assets as of
December 31, 2017 resulting from new tax laws. Combined, these
discrete tax items increased earnings per share in 2017 by
approximately 2 cents. Results in 2016 included discrete tax items
related to the Section 199 domestic production activities deduction
for the 2013 through 2016 tax years and an increase in the
previously estimated federal research and development tax credit
for the 2015 and 2016 tax years that when combined with other
non-recurring tax adjustments, increased earnings per share in 2016
by approximately 10 cents.
Fourth Quarter Earnings Call and Webcast Details
On January 31, 2018, the Company will host a call to discuss its
2017 fourth quarter and full-year financial and operational results
and to answer questions from the investment community. The call may
also include a discussion of Company developments, and
forward-looking and other material information about business and
financial matters.
Dial-In Information
Wednesday, Jan. 31, 2018 4:30 p.m. (EST) Conference ID:
6230623 Call bridge: 888-394-8218 (U.S. callers) or 323-794-2149
(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/investor-relations
A replay of NIC’s fourth quarter earnings call will be available
by visiting http://www.egov.com/investor-relations.
About NIC
NIC Inc. (NASDAQ: EGOV) is the nation’s premier provider of
innovative digital government solutions and secure payment
processing, which help make government interactions more accessible
for everyone through technology. The family of NIC companies has
developed a library of more than 13,000 digital government services
for more than 5,500 federal, state, and local government agencies.
Among these solutions is the ground-breaking personal assistant for
government, Gov2Go, delivering citizens personalized reminders and
a single access point for government interactions. More information
is available at www.egov.com.
Cautionary Statement Regarding Forward-Looking
Information
Any statements included in this release that do not relate to
historical or current facts constitute forward-looking statements.
These statements include estimates, projections, the expected
length of contract terms, statements relating to the Company’s
business plans, objectives and expected operating results,
statements relating to possible future dividends, and the
assumptions upon which those statements are based. Forward-looking
statements are based on current expectations and assumptions that
are subject to risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements,
including regional or national business, political, economic,
competitive, social and market conditions, including various
termination rights of the Company and its partners, the ability of
the Company to renew existing contracts, and to sign contracts with
new states, and federal and local government agencies, as well as
possible data security incidents. You should not rely on any
forward-looking statement as a prediction or guarantee about the
future. A detailed discussion of risks and uncertainties that could
cause actual results and events to differ materially from such
forward-looking statements is included in the sections titled “Risk
Factors” and “Caution About Forward-Looking Statements” of the
Company’s most recent Forms 10-K and 10-Q filed with the SEC. These
filings are available at the SEC's web site at www.sec.gov. Any
forward-looking statements made in this release speak only as of
the date of this release. Except as required by applicable law, we
undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events, or otherwise.
NIC INC. CONSOLIDATED STATEMENTS OF INCOME AND FINANCIAL
SUMMARY (In thousands, except per share amounts and
percentages) (Unaudited) Three
months ended Twelve months ended
December 31, December 31, 2017
2016 2017 2016 Revenues: Portal
revenues $ 78,388 $ 73,291 $ 311,351 $ 296,998 Software &
services revenues 5,084 5,051
25,157 20,917 Total revenues 83,472
78,342 336,508 317,915
Operating expenses: Cost of portal revenues, exclusive of
depreciation & amortization 48,246 45,409 191,572 180,287
Cost of software & services revenues,
exclusive of depreciation & amortization
2,087 1,604 8,890 5,958 Selling & administrative 13,898 12,880
50,780 47,063 Depreciation & amortization 1,818
1,676 6,929 6,749 Total
operating expenses 66,049 61,569
258,171 240,057 Operating income before income
taxes 17,423 16,773 78,337 77,858 Income tax provision 6,583
3,129 26,723 22,025
Net income $ 10,840 $ 13,644 $ 51,614 $
55,833 Basic net income per share $ 0.16 $
0.20 $ 0.77 $ 0.84 Diluted net income per
share $ 0.16 $ 0.20 $ 0.77 $ 0.84
Weighted average shares outstanding: Basic 66,270
65,981 66,209 65,913
Diluted 66,334 66,041
66,266 65,966 Key Financial Metrics:
Revenue growth - outsourced portals 7 % 10 % 5 % 9 % Same state
revenue growth - outsourced portals 6 % 9 % 6 % 9 % Recurring
portal revenue as a % of total portal revenues 97 % 95 % 97 % 96 %
Gross profit % - outsourced portals 38 % 38 % 38 % 39 % Revenue
growth - software & services 1 % 7 % 20 % 11 % Gross profit % -
software & services 59 % 68 % 65 % 72 % Selling &
administrative expenses as a % of total revenues 17 % 16 % 15 % 15
% Operating income as a % of total revenue 21 % 21 % 23 % 24 %
Portal Revenue Analysis: IGS $ 48,007 $ 42,905 $ 192,200 $
174,470 DHR 24,111 25,258 103,899 105,463 Portal software
development 5,022 3,853 10,180 11,965 Portal management
1,248 1,275 5,072 5,100
Total portal revenues $ 78,388 $ 73,291 $
311,351 $ 296,998
NIC INC.
CONSOLIDATED BALANCE SHEETS (In thousands, except par
value amount) (Unaudited)
December 31, 2017 December 31, 2016
ASSETS Current assets: Cash $ 160,777 $ 127,009 Trade
accounts receivable, net 103,938 82,722 Prepaid expenses &
other current assets 12,843 15,033 Total current
assets 277,558 224,764 Property and equipment, net 10,306 9,726
Intangible assets, net 5,214 3,588 Deferred income taxes, net 667
2,307 Other assets 1,986 477 Total assets $ 295,731 $
240,862
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 88,920 $ 73,252 Accrued expenses
26,501 23,395 Other current liabilities 3,673 3,150
Total current liabilities 119,094 99,797 Other long-term
liabilities 8,395 7,162 Total liabilities
127,489 106,959 Commitments and contingencies - -
Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares
authorized, 66,271 and 65,982 shares issued and outstanding
7 7 Additional paid-in capital 111,275 106,669 Retained earnings
56,960 27,227 Total stockholders' equity
168,242 133,903 Total liabilities and stockholders' equity $
295,731 $ 240,862
NIC INC. CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (In
thousands) (Unaudited)
Additional Common
Stock Paid-in Shares Amount
Capital Retained Earnings Total Balance,
January 1, 2017 65,982 $ 7 $ 106,669 $ 27,227 $ 133,903
Cumulative effect of adoption of accounting standard $ 409 $ (409 )
Net income - - - 51,614 51,614 Dividends declared - - - (21,393 )
(21,393 )
Dividend equivalents on unvested
performance-based restricted stock awards
- - 110 (110 ) -
Dividend equivalents cancelled upon
forfeiture of performance-based restricted stock awards
- - (31 ) 31 - Restricted stock vestings 319 - - - -
Shares surrendered and cancelled upon
vesting of restricted stock to satisfy tax withholdings
(122 ) - (2,676 ) - (2,676 ) Stock-based compensation - - 5,464 -
5,464
Shares issuable in lieu of dividend
payments on performance-based restricted stock awards
5 - - - - Issuance of common stock under employee stock purchase
plan 87 - 1,330 -
1,330
Balance, December 31, 2017 66,271 $ 7 $
111,275 $ 56,960 $ 168,242
NIC INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited) Twelve
months ended December 31, 2017
2016 (as adjusted) Cash flows from operating
activities: Net income $ 51,614 $ 55,833 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation & amortization 6,929 6,749 Stock-based
compensation expense 5,464 5,997 Deferred income taxes 1,640 (886 )
Provision for losses on accounts receivable 552 142 Loss on
disposal of property and equipment 49 24 Excess tax benefits
related to stock-based compensation - 590 Changes in operating
assets and liabilities: (Increase) in trade accounts receivable,
net (21,769 ) (2,501 ) Decrease (increase) in prepaid expenses
& other current assets 2,191 (2,449 ) (Increase) in other
assets (1,509 ) (51 ) Increase in accounts payable 15,669 12,119
Increase in accrued expenses 2,251 2,136 Increase in other current
liabilities 522 553 Increase in other long-term liabilities
1,233 2,903 Net cash provided by operating
activities 64,836 81,159 Cash flows
from investing activities: Purchases of property and equipment
(4,771 ) (5,646 ) Proceeds from sale of property and equipment 7 8
Capitalized internal use software development costs (3,565 )
(2,576 ) Net cash used in investing activities (8,329
) (8,214 ) Cash flows from financing activities: Cash
dividends on common stock (21,393 ) (43,301 ) Proceeds from
employee common stock purchases 1,330 1,114 Tax withholdings
related to stock-based compensation awards (2,676 )
(2,137 ) Net cash used in financing activities (22,739 )
(44,324 ) Net increase in cash 33,768 28,621 Cash, beginning
of period 127,009 98,388 Cash, end of
period $ 160,777 $ 127,009 Supplemental cash flow
information: Non-cash investing activities: Capital expenditures
accrued but not yet paid $ 855 $ 273 Cash payments: Income
taxes paid, net of refunds $ 21,303 $ 19,847 Cash dividends on
common stock previously restricted for payment of dividend $ - $
36,456
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180131006161/en/
NIC Inc.Angela Davied, 913-754-7054Vice President,
Corporate Communicationsadavied@egov.com
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