NIC Inc. (Nasdaq: EGOV), the leading provider of digital
government services, announced results for the first quarter of
2020 that ended March 31, 2020, as compared to the first quarter of
2019.
- Total revenues of $91.1 million, a 7% increase.
- Operating income of $15.3 million, a 2% increase.
- Net income of $11.9 million, a 3% increase.
- Diluted earnings per share of 18 cents, a 6%
increase.
- Adjusted EBITDA of $20.1 million, a 5% decrease.
Additional Financial
Highlights:
- Same state revenues of $74.2 million, a 7% increase.
- Same state transaction-based revenues from Interactive
Government Services (IGS) increased 13%.
- Same state transaction-based revenues from Driver History
Records (DHR) decreased 4%.
- Same state revenues from other services (development services
& fixed fee management services) decreased 1%.
- Revenues from the Company's operations in the state of Illinois
were excluded from same state revenues in the current quarter
because it did not generate comparable revenues for two full
comparable periods.
- Financial results from the Company’s Texas payment processing
contract previously included in the State Enterprise category were
included in the Software & Services category beginning in the
first quarter of 2020. Financial results in the prior year quarter
were reclassified to match the current quarter presentation.
- Software & Services revenues of $16.7 million, a 9%
increase, driven by revenue growth from the Texas payment
processing contract and by higher revenues from the Company’s RxGov
prescription drug monitoring business and recently acquired NIC
Licensing Solutions business.
- During the first quarter of 2020, the Company purchased 241,180
shares of common stock under its $25 million repurchase program at
a weighted average purchase price per share of $16.33 for a total
purchase price of $3.9 million. The remaining $21.1 million
authorized under the repurchase program is available for future
share repurchases.
- On April 23, 2020, the Company’s Board of Directors declared a
regular quarterly cash dividend of 9 cents per share, payable to
stockholders of record as of June 11, 2020. The dividend, which is
expected to total approximately $6.1 million based on the current
number of shares outstanding, will be paid on June 25, 2020 out of
the Company’s available cash.
“I commend our government partners and 1,000 employees across
the country for the tremendous job they are doing to support the
needs of citizens and businesses during a time when government
offices are closed for the first time ever,” said Harry Herington,
NIC’s Chief Executive Officer and Chairman of the Board. “Together,
our teams have been working 24/7 to proactively address and respond
to the onslaught of needs brought on by this pandemic and keep
government open for business online. Since the beginning of the
COVID-19 outbreak, we have launched more than 130 digital services
in addition to dozens of cloud-based informational sites that
connect government, citizens and businesses and address
mission-critical areas such as unemployment filings, COVID-19
testing, nurse licensing and the procurement of personal protection
equipment.”
Operational Highlights:
Several of the Company’s long-term government partners recently
extended their relationships with the Company:
- Alabama extended its contract with the Company for one
year.
- Kentucky extended its contract with the Company for two years.
The extension includes four one-year renewal options, for a
possible total of six years.
- The Company signed a new contract with the state of Louisiana
Division of Administration, which allows the Company to continue
providing digital services to the state for the next six
years.
- New Jersey extended its contract with the Company for one
year.
- Following a competitive rebid, the Company signed a new
five-year contract with the state of New Mexico, which includes one
five-year renewal term, which can be exercised at the state's
option, for a possible total of ten years.
- The Federal Motor Carrier Safety Administration extended its
contract with the Company to provide the Pre-Employment Screening
Program for an additional six months through August 27, 2020. The
contract has one sixth-month renewal option remaining.
The Company was also recently awarded a five-year contract with
the state of Maine to provide RxGov as the state’s prescription
drug monitoring platform.
The Company recently finalized the implementation of its
cannabis licensing solution for the state of Missouri and the state
has contracted for an additional module, which NIC will be
deploying over the next several months. The Company’s contract in
Missouri runs through mid-2024 with renewal options the state may
exercise through mid-2026.
COVID-19 and Updated Full-Year 2020
Outlook:
NIC is evaluating the impact the COVID-19 pandemic will have on
its business for the remainder of the year. Based on this ongoing
evaluation, the Company currently expects to come in near the low
end of its previously issued guidance for total revenues, which was
$380.5 million, adjusted EBITDA, which was $88.5 million, and
earnings per share, which was 76 cents. The Company's previous
guidance for capital expenditures and capitalized software
development costs for 2020 remains unchanged.
“Despite some unprecedented revenue softness resulting from the
COVID-19 pandemic in the latter part of March, NIC is a stable,
essential company helping government remain open for business.
Furthermore, NIC is in a unique position of strength during these
uncertain times with no debt, considerable cash in the bank and a
resilient business model that is providing immense value to our
government partners at a time when they need it the most,” said
Steve Kovzan, NIC's Chief Financial Officer.
First Quarter Earnings Call and Webcast
Details
On April 27, 2020, the Company will host a call to discuss its
2020 first quarter financial and operational results, its updated
full-year 2020 guidance, 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
Monday, April 27, 2020 at 8:30 a.m.
(EDT)
Call bridge:
1-888-394-8218 (U.S. callers) or
1-646-828-8193 (international callers)
Conference ID:
8211581
Call leaders:
Harry Herington, Chief Executive Officer
and Chairman of the Board
Steve Kovzan, Chief Financial Officer
Webcast Information
To sign in and listen: The Webcast system is available at
https://www.egov.com/investor-relations.html.
A replay of NIC’s first quarter earnings call will be available
by visiting https://www.egov.com/investor-relations.html.
About NIC
NIC Inc. (Nasdaq: EGOV) launched the digital government industry
in 1992, and continues to lead it, providing a secure payment
platform and thousands of digital government solutions across a
network of more than 6,000 federal, state, and local government
agencies. In addition, NIC is a leading provider of outdoor
recreation solutions, with 1 out of 6 hunting and fishing licenses
in the United States sold using an NIC service. The Company
launched the nation's first personal assistant for government and
comprehensive mobile device platform, Gov2Go®, as well as the
innovative, data-driven prescription drug monitoring platform,
RxGov®. More information is available at www.egov.com.
Non-GAAP Measures
In addition to the results presented in accordance with U.S.
GAAP, the Company presents non-GAAP financial measures, such as
adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA is
defined as net income excluding interest, income tax expense,
depreciation & amortization, stock-based compensation and other
significant non-operating or non-recurring items that are
considered expenses or income under U.S. GAAP. Adjusted EBITDA
margin is defined as adjusted EBITDA divided by total revenues.
These measures should be used in addition to, and not as a
substitute for, revenues, operating income, operating income
margin, net income, earnings per share or other measures of
profitability, liquidity or other performance measures computed in
accordance with U.S. GAAP. The Company believes the presentation of
adjusted EBITDA and adjusted EBITDA margin is useful to investors
and other users as these measures represent key supplemental
information to compare and evaluate the Company's core underlying
business results over time and with other companies. The non-GAAP
measures used by the Company may not be comparable to similarly
titled non-GAAP measures used by other companies. The attached
schedule provides a full reconciliation of these non-GAAP financial
measures to the most directly comparable U.S. GAAP financial
measures. Adjusted EBITDA and adjusted EBITDA margin represent
performance measures and are not intended to represent liquidity
measures.
Cautionary Statement Regarding Forward-Looking
Information
Any statements made in this release that do not relate to
historical or current facts constitute forward-looking statements.
These statements often address the Company’s potential financial
performance for the 2020 fiscal year or future fiscal years,
estimates, projections, the expected length of contract terms,
statements relating to the Company’s business plans, objectives and
expected operating results, statements relating to potential new
contracts or renewals, statements relating to the Company’s
expected effective tax rate, statements relating to possible future
dividends and share repurchases, statements related to the ongoing
impact of the COVID-19 pandemic, and other possible future events,
including potential acquisitions, 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. These risks include 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 – in whole or in part, and to sign contracts
with new federal, state, and local government agencies, the impact
of potential information technology, cybersecurity or data security
breaches or incidents, the Company’s ability to identify and
acquire suitable acquisition candidates and to successfully
integrate any acquired businesses, and the impact the COVID-19
pandemic may have on demand for the Company's services, as well as
its government agency partners, its workforce and the broader
economy. 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 Cautions About
Forward-Looking Statements" of the Company’s most recent Forms 10-K
and subsequent reports filed with the SEC. These filings are
available at the SEC's website at www.sec.gov. Any forward-looking
statements included in this release speak only as of the date of
this release. Except as may be required by applicable law, the
Company undertakes 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
March 31,
2020
2019
Revenues:
State enterprise revenues
$
74,411
$
69,853
Software & services revenues
16,708
15,327
Total revenues
91,119
85,180
Operating expenses:
State enterprise cost of revenues,
exclusive of depreciation & amortization
46,271
41,978
Software & services cost of revenues,
exclusive of depreciation & amortization
10,724
9,397
Selling & administrative
8,064
9,964
Enterprise technology & product
support
7,254
6,445
Depreciation & amortization
3,482
2,421
Total operating expenses
75,795
70,205
Operating income
15,324
14,975
Other income:
Interest income
389
604
Income before income taxes
15,713
15,579
Income tax provision
3,850
4,077
Net income
$
11,863
$
11,502
Basic net income per share
$
0.18
$
0.17
Diluted net income per share
$
0.18
$
0.17
Weighted average shares outstanding:
Basic
66,987
66,670
Diluted
66,987
66,670
Key financial metrics:
Total revenue growth
7
%
(2)
%
Recurring revenues as a % of total
revenues
98
%
97
%
State enterprise revenue growth
7
%
(14)
%
Same state revenue growth
7
%
10
%
Gross profit % - state enterprise
38
%
40
%
Software & services revenue growth
9
%
158
%
Gross profit % - software &
services
36
%
39
%
Selling & administrative as a % of
total revenues
9
%
12
%
Enterprise technology & product
support as a % of total revenues
8
%
8
%
Operating income as a % of total revenue
("operating margin")
17
%
18
%
State enterprise revenue analysis:
IGS
$
48,187
$
42,751
DHR
22,849
23,685
Development services
2,137
2,179
Fixed-fee management services
1,238
1,238
Total state enterprise revenues
$
74,411
$
69,853
NIC INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except par
value amount)
(Unaudited)
March 31, 2020
December 31, 2019
ASSETS
Current assets:
Cash
$
217,587
$
214,380
Trade accounts receivable, net
101,814
85,399
Prepaid expenses & other current
assets
18,375
12,944
Total current assets
337,776
312,723
Property and equipment, net
10,150
10,091
Right of use lease assets, net
9,901
10,778
Intangible assets, net
22,109
22,398
Goodwill
5,965
5,965
Other assets
794
404
Total assets
$
386,695
$
362,359
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
88,056
$
63,685
Accrued expenses
21,118
25,940
Lease liabilities
3,642
3,776
Other current liabilities
8,951
7,191
Total current liabilities
121,767
100,592
Deferred income taxes, net
3,183
2,463
Lease liabilities
6,607
7,373
Other long-term liabilities
6,094
6,003
Total liabilities
137,651
116,431
Commitments and contingencies
—
—
Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares
authorized, 66,968 and 66,968 shares issued and outstanding
7
7
Additional paid-in capital
123,683
123,208
Retained earnings
125,354
122,713
Total stockholders' equity
249,044
245,928
Total liabilities and stockholders'
equity
$
386,695
$
362,359
NIC INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2020
2019
Cash flows from operating activities:
Net income
$
11,863
$
11,502
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization
3,482
2,421
Stock-based compensation expense
1,319
2,272
Deferred income taxes
603
1,076
Provision (recoveries) for losses on
accounts receivable
347
(186
)
Changes in operating assets and
liabilities:
Trade accounts receivable, net
(16,306
)
(32,464
)
Prepaid expenses & other current
assets
(5,431
)
(1,205
)
Other assets
697
1,069
Accounts payable
24,371
20,008
Accrued expenses
(4,822
)
(3,183
)
Other current liabilities
1,416
422
Other long-term liabilities
(675
)
(664
)
Net cash provided by operating
activities
16,864
1,068
Cash flows from investing activities:
Purchases of property and equipment
(1,060
)
(1,484
)
Asset acquisition
—
(1,743
)
Capitalized software development costs
(2,192
)
(2,417
)
Net cash used in investing activities
(3,252
)
(5,644
)
Cash flows from financing activities:
Cash dividends on common stock
(6,105
)
(5,402
)
Proceeds from employee common stock
purchases
1,509
1,443
Shares surrendered upon vesting of
restricted stock to satisfy tax withholdings
(1,865
)
(2,609
)
Repurchase of shares
(3,944
)
—
Net cash used in financing activities
(10,405
)
(6,568
)
Net increase (decrease) in cash
3,207
(11,144
)
Cash, beginning of period
214,380
191,700
Cash, end of period
217,587
180,556
Other cash flow information:
Cash payments:
Income taxes paid, net
$
4,391
$
3,637
NIC INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(In thousands)
(Unaudited)
Three Months Ended
March 31,
Reconciliation of
net income to Adjusted EBITDA
2020
2019
Net income
$
11,863
$
11,502
Add: Income tax expense
3,850
4,077
Less: Interest income
389
604
Operating income
15,324
14,975
Add: Depreciation & amortization
expense
3,482
2,421
Add: Stock-based compensation expense,
inclusive of executive severance (1)
1,319
2,272
Add: Executive severance payments (1)
—
1,526
Adjusted EBITDA
$
20,125
$
21,194
Total Revenues
$
91,119
$
85,180
Net income as a % of total revenues ("net
profit margin")
13
%
14
%
Adjusted EBITDA as a % of total revenues
("Adjusted EBITDA margin")
22
%
25
%
Detail of
stock-based compensation expense
State enterprise cost of revenues,
exclusive of depreciation & amortization
$
358
$
361
Software & services cost of revenues,
exclusive of depreciation & amortization
28
35
Selling & administrative
768
1,716
Enterprise technology & product
support
165
160
Total stock-based compensation expense
$
1,319
$
2,272
(1)
Executive severance expense of $2.6
million related to the departure of the Company's former Chief
Operating Officer is included in selling & administrative
expense in the consolidated statements of income and financial
summary for the three months ended March 31, 2019. These costs
consisted of a one-time cash payment of $1.5 million and $1.1
million of stock-based compensation expense associated with the
accelerated vesting of certain restricted stock awards. These costs
were excluded from Adjusted EBITDA because the Company does not
regard these costs as reflective of normal recurring costs to
operate its business.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200427005200/en/
Angie Davids Senior VP, Marketing and Communications (913)
754-7054 angie.davids@egov.com
NIC (NASDAQ:EGOV)
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