Cancels Upcoming Fourth Quarter Conference
Call in Light of Pending Transaction with Tyler
Technologies
NIC Inc. (Nasdaq: EGOV), a leading digital government solutions
and payments company, announced results for the fourth quarter of
2020 that ended December 31, 2020, as compared to the fourth
quarter of 2019.
- Total revenues of $141.2 million, a 62% increase.
- Total revenues reflect $36.8 million from TourHealth, the
Company's COVID-19 testing solution with Impact Health and NEXT
Marketing.
- Total revenues reflect $8.4 million from pandemic unemployment
services provided to the Commonwealth of Virginia.
- Operating income of $23.9 million, a 104% increase.
- Operating income reflects a $5.2 million contribution from
TourHealth.
- Operating income reflects a $1.9 million contribution from
pandemic unemployment services provided to the Commonwealth of
Virginia.
- Net income of $17.8 million, a 79% increase.
- Diluted earnings per share of 26 cents, a 73% increase.
- Diluted earnings per share reflects an approximate 5 cent
contribution from TourHealth.
- Diluted earnings per share reflects an approximate 2 cent
contribution from pandemic unemployment services provided to the
Commonwealth of Virginia.
- Diluted earnings per share was positively impacted by
approximately 1 cent due to the release of reserves for
unrecognized income tax benefits resulting from statute of
limitations expirations. Certain similar discrete tax items
positively impacted diluted earnings per share by approximately 2
cents in the prior year.
- Adjusted EBITDA of $29.8 million, a 77% increase.
Additional Fourth Quarter Financial
Highlights:
- Same state revenues of $88.0 million, a 22% increase.
- Same state transaction-based revenues from Interactive
Government Services (IGS) increased 13%, driven, in part, by higher
revenues from DMV-related services, such as auto registrations,
tax-related services, and outdoor recreation services, among
others.
- Same state transaction-based revenues from Driver History
Records (DHR) decreased 4%, driven by volume declines in several
states resulting primarily from the COVID-19 pandemic.
- Same state revenues from other services (development services
& fixed-fee management services) increased 240%, driven by
revenues from pandemic unemployment services provided to the
Commonwealth of Virginia, as described above.
- 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 were
reclassified to match the current year presentation.
- Software & Services revenues of $53.1 million, a 260%
increase, driven primarily by revenues from TourHealth, as
described above.
- On February 1, 2021, the Company’s Board of Directors declared
a regular quarterly cash dividend of 9 cents per share, payable to
stockholders of record as of March 3, 2021. The dividend, which is
expected to total approximately $6.1 million based on the current
number of shares outstanding, will be paid on March 17, 2021 out of
the Company’s available cash.
Operational Highlights:
The Illinois Department of Agriculture awarded the Company a
contract to provide its cannabis licensing solution for the state
of Illinois through 2024.
In addition to this award, several of the Company’s long-term
government partners recently extended their relationships with the
Company:
- Alabama extended its enterprise contract with the Company for
one year.
- Indiana extended its enterprise contract with the Company for
one year.
During the fourth quarter of 2020, TourHealth provided testing
services to the states of Florida, South Carolina and Kansas, as
well as the Alabama Department of Corrections and the University of
Mississippi. Beginning in the first quarter of 2021, TourHealth
began testing legislators, staff and media at the Capitol building
in Carson City, Nevada. The TourHealth team has also partnered with
Delta airlines to test passengers and staff of international
flights initially at the Detroit Metropolitan Airport and the
Minneapolis−Saint Paul International Airport.
“I am very proud of our very strong financial performance in the
fourth quarter of 2020,” said Harry Herington, NIC CEO and Chairman
of the Board. “These results are a testament to the dedication and
focus of our employees and our federal, state and local partners,
who worked tirelessly to provide essential government services and
introduce new critical solutions to citizens and businesses alike,
all in the midst of a global pandemic.”
Full Year 2020
Performance:
- Total revenues of $460.5 million, a 30% increase.
- Total revenues reflect $61.6 million from TourHealth.
- Total revenues reflect $19.6 million from pandemic unemployment
services provided to the Commonwealth of Virginia.
- Operating income of $87.4 million, a 40% increase.
- Operating income reflects a $10.0 million contribution from
TourHealth.
- Operating income reflects a $5.0 million contribution from
pandemic unemployment services provided to the Commonwealth of
Virginia.
- Net income of $68.6 million, a 36% increase.
- Diluted earnings per share of $1.01, a 35% increase.
- Diluted earnings per share reflects an approximate 12 cent
contribution from TourHealth.
- Diluted earnings per share reflects an approximate 6 cent
contribution from pandemic unemployment services provided to the
Commonwealth of Virginia.
- Diluted earnings per share was positively impacted by
approximately 5 cents due to the release of reserves for
unrecognized income tax benefits resulting from statute of
limitations expirations and other favorable tax adjustments
recognized upon filing the Company's 2019 tax return. Certain
similar discrete tax items positively impacted diluted earnings per
share by approximately 3 cents in the prior year.
- Adjusted EBITDA of $108.8 million, a 31% increase.
Additional 2020 Financial
Highlights:
- Same state revenues of $329.4 million, a 14% increase.
- Same state transaction-based revenues from Interactive
Government Services (IGS) increased 14%.
- Same state transaction-based revenues from Driver History
Records (DHR) decreased 6%, driven by volume declines in several
states resulting primarily from the COVID-19 pandemic.
- Same state revenues from other services (development services
& fixed-fee management services) increased 136%, driven by
revenues from pandemic unemployment services provided to the
Commonwealth of Virginia, as described above.
- The results of the Illinois contract were excluded from the
same-state category for the full year 2020.
- Software & Services revenues of $128.7 million, a 101%
increase, driven primarily by revenues from TourHealth, as
described above.
Transaction with Tyler
Technologies
In a separate press release issued today, NIC and Tyler
Technologies (NYSE: TYL) jointly announced that they have entered
into a definitive agreement under which Tyler Technologies will
acquire all outstanding shares of NIC in an all-cash transaction
valued at approximately $2.3 billion. A copy of the press release
can be found on NIC’s investor relations website at ir.egov.com. In
light of the announced transaction, NIC’s earnings call scheduled
for February 11, 2021 will no longer take place.
About NIC
NIC (Nasdaq: EGOV) is a leading digital government solutions and
payments company, serving more than 7,000 federal, state and local
government agencies across the nation. With headquarters in Olathe,
Kansas, and offices in more than 30 states, NIC partners with
government to deliver user-friendly digital services that make it
easier and more efficient to interact with government – providing
valuable conveniences like applying for unemployment insurance,
submitting business filings, renewing licenses, accessing
information and making secure payments without visiting a
government office. In the COVID-19 era and beyond, NIC helps
government agencies rapidly deliver new digital solutions to
provide essential services to citizens and businesses alike. Having
served the public sector for nearly 30 years, NIC continues to
evolve with its federal, state and local government partners to
deliver innovative and cost-effective digital government to
constituents. Learn more 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 NIC’s potential financial
performance for the 2021 fiscal year or future fiscal years,
estimates, projections, the expected length of contract terms,
statements relating to NIC’s business plans, objectives and
expected operating results, statements relating to potential new
contracts or renewals, statements relating to NIC’s expected
effective tax rate, statements relating to the proposed transaction
with Tyler Technologies, statements relating to possible future
dividends and share repurchases, statements related to the ongoing
effects the COVID-19 pandemic is expected to have on NIC’s business
and financial results, including statements relating to the
duration, profitability and unsatisfied performance obligations of
NIC’s services, including NIC’s COVID-19 testing solution, 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 NIC and its partners, the
ability of NIC 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, NIC’s ability
to consummate the proposed transaction with Tyler Technologies, and
the effects the COVID-19 pandemic may have on continued demand for
and profitability of NIC’s services, including NIC’s COVID-19
testing solution, 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 NIC’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, NIC undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events, or otherwise.
Additional Information and Where to Find It
This release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. This release may be deemed to be solicitation
material in respect of the proposed transaction involving NIC and
Tyler Technologies. In connection with the proposed transaction,
NIC plans to file a proxy statement with the SEC. STOCKHOLDERS OF
NIC ARE URGED TO READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS
OR SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE
THEREIN) AND OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE
PROPOSED TRANSACTION THAT NIC WILL FILE WITH THE SEC WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED
TRANSACTION. Stockholders and investors will be able to obtain free
copies of the proxy statement and other relevant materials (when
they become available) and other documents filed by NIC at the
SEC’s website at www.sec.gov. Copies of the proxy statement (when
they become available) and the filings that will be incorporated by
reference therein may also be obtained, without charge, on NIC’s
Investor Relations website at https://ir.egov.com.
Participants in Solicitation
NIC and Tyler Technologies and their respective directors,
executive officers and certain employees, may be deemed, under SEC
rules, to be participants in the solicitation of proxies in respect
of the proposed merger. Information regarding NIC’s directors and
executive officers is available in its proxy statement filed with
the SEC on March 12, 2020. Information regarding Tyler
Technologies’ directors and executive officers is available in its
proxy statement filed with the SEC on April 1, 2020. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy
statement and other relevant materials to be filed with the SEC
(when they become available). These documents can be obtained free
of charge from the sources indicated above.
NIC INC.
CONSOLIDATED STATEMENTS OF
INCOME AND FINANCIAL SUMMARY
(In thousands, except per
share amounts and percentages)
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Revenues:
State enterprise revenues
$
88,030
$
72,301
$
331,720
$
290,281
Software & services revenues
53,126
14,773
128,734
63,924
Total revenues
141,156
87,074
460,454
354,205
Operating expenses:
State enterprise cost of revenues,
exclusive of depreciation & amortization
53,947
44,610
199,901
175,490
Software & services cost of revenues,
exclusive of depreciation & amortization
42,475
11,541
94,833
41,636
Selling & administrative
9,354
8,727
34,551
35,200
Enterprise technology & product
support
7,694
6,917
29,491
26,850
Depreciation & amortization
3,762
3,535
14,245
12,610
Total operating expenses
117,232
75,330
373,021
291,786
Operating income
23,924
11,744
87,433
62,419
Other income:
Interest income
—
604
389
2,514
Income before income taxes
23,924
12,348
87,822
64,933
Income tax provision
6,080
2,390
19,228
14,503
Net income
$
17,844
$
9,958
$
68,594
$
50,430
Basic net income per share
$
0.26
$
0.15
$
1.01
$
0.75
Diluted net income per share
$
0.26
$
0.15
$
1.01
$
0.75
Weighted average shares outstanding:
Basic
67,030
66,967
67,010
66,884
Diluted
67,166
66,967
67,117
66,884
Key financial metrics:
Total revenue growth
62
%
11
%
30
%
3
%
Recurring revenues as a % of total
revenues
65
%
97
%
80
%
97
%
State enterprise revenue growth
(decline)
22
%
9
%
14
%
(7
)%
Same state revenue growth
22
%
9
%
14
%
10
%
Gross profit % - state enterprise
39
%
38
%
40
%
40
%
Software & services revenue growth
260
%
19
%
101
%
97
%
Gross profit % - software &
services
20
%
22
%
26
%
35
%
Selling & administrative as a % of
total revenues
7
%
10
%
8
%
10
%
Enterprise technology & product
support as a % of total revenues
5
%
8
%
6
%
8
%
Operating income as a % of total revenues
("operating margin")
17
%
13
%
19
%
18
%
State enterprise revenue analysis:
IGS
$
53,466
$
47,160
$
209,902
$
183,987
DHR
20,165
20,901
85,338
91,059
Development services
13,161
3,002
31,530
10,285
Fixed-fee management services
1,238
1,238
4,950
4,950
Total state enterprise revenues
$
88,030
$
72,301
$
331,720
$
290,281
NIC INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except par
value amount)
(Unaudited)
December 31, 2020
December 31, 2019
ASSETS
Current assets:
Cash
$
236,513
$
214,380
Trade accounts receivable, net
155,484
85,399
Prepaid expenses & other current
assets
23,638
12,944
Total current assets
415,635
312,723
Property and equipment, net
9,341
10,091
Right of use lease assets, net
10,809
10,778
Intangible assets, net
20,737
22,398
Goodwill
5,965
5,965
Other assets
1,862
404
Total assets
$
464,349
$
362,359
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
82,364
$
63,685
Accrued expenses
61,064
25,940
Lease liabilities
4,078
3,776
Other current liabilities
10,491
7,191
Total current liabilities
157,997
100,592
Deferred income taxes, net
1,097
2,463
Lease liabilities
7,172
7,373
Other long-term liabilities
4,934
6,003
Total liabilities
171,200
116,431
Commitments and contingencies
—
—
Stockholders' equity:
Common stock, $0.0001 par, 200,000 shares
authorized, 67,031 and 66,968 shares issued and outstanding
7
7
Additional paid-in capital
129,456
123,208
Retained earnings
163,686
122,713
Total stockholders' equity
293,149
245,928
Total liabilities and stockholders'
equity
$
464,349
$
362,359
NIC INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended
December 31,
2020
2019
Cash flows from operating activities:
Net income
$
68,594
$
50,430
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization
14,245
12,610
Stock-based compensation expense
7,158
6,769
Deferred income taxes
(1,483
)
1,682
Provision for losses on accounts
receivable
1,505
782
Loss on disposal of property and
equipment
—
89
Changes in operating assets and
liabilities:
Trade accounts receivable, net
(71,134
)
(4,826
)
Prepaid expenses & other current
assets
(10,694
)
789
Other assets
2,940
4,430
Accounts payable
18,679
3,593
Accrued expenses
35,124
1,788
Other current liabilities
2,084
1,132
Other long-term liabilities
(4,181
)
(7,218
)
Net cash provided by operating
activities
62,837
72,050
Cash flows from investing activities:
Capital expenditures
(3,354
)
(4,253
)
Capitalized software development costs
(8,481
)
(8,671
)
Business combination
—
(10,000
)
Asset acquisition
—
(3,486
)
Net cash used in investing activities
(11,835
)
(26,410
)
Cash flows from financing activities:
Cash dividends on common stock
(24,398
)
(21,649
)
Proceeds from employee common stock
purchases
1,509
1,443
Shares surrendered upon vesting of
restricted stock to satisfy tax withholdings
(2,036
)
(2,754
)
Repurchase of shares
(3,944
)
—
Net cash used in financing activities
(28,869
)
(22,960
)
Net increase in cash
22,133
22,680
Cash, beginning of period
214,380
191,700
Cash, end of period
236,513
214,380
Other cash flow information:
Non-cash activities:
Contingent consideration - business
combination
$
—
$
960
Cash payments:
Income taxes paid, net
$
19,649
$
16,035
NIC INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(In thousands)
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
Reconciliation of net income to Adjusted
EBITDA
2020
2019
2020
2019
Net income
$
17,844
$
9,958
$
68,594
$
50,430
Add: Income tax expense
6,080
2,390
19,228
14,503
Less: Interest income
—
604
389
2,514
Operating income
23,924
11,744
87,433
62,419
Add: Depreciation & amortization
expense
3,762
3,535
14,245
12,610
Add: Stock-based compensation expense,
inclusive of executive severance (1)
2,102
1,543
7,158
6,769
Add: Executive severance payments (1)
—
—
—
1,526
Adjusted EBITDA
$
29,788
$
16,822
$
108,836
$
83,324
Total Revenues
$
141,156
$
87,074
$
460,454
$
354,205
Net income as a % of total revenues ("net
profit margin")
13
%
11
%
15
%
14
%
Adjusted EBITDA as a % of total revenues
("Adjusted EBITDA margin")
21
%
19
%
24
%
24
%
Detail of
stock-based compensation expense
State enterprise cost of revenues,
exclusive of depreciation & amortization
$
418
$
373
$
1,585
$
1,499
Software & services cost of revenues,
exclusive of depreciation & amortization
47
26
162
101
Selling & administrative
1,415
972
4,599
4,495
Enterprise technology & product
support
222
172
812
674
Total stock-based compensation expense
$
2,102
$
1,543
$
7,158
$
6,769
(1)
Executive severance expense of
$2.6 million related to the departure of the Company's former Chief
Operating Officer in the first quarter of 2019 is included in
selling & administrative expense in the consolidated statements
of income and financial summary for the twelve months ended
December 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/20210210005481/en/
Investors: Steve Kovzan Chief
Financial Officer (913) 754-7007 stevek@egov.com Media: Elizabeth Proudfit Senior Vice President -
Marketing & Communications (646) 845-7356
eproudfit@egov.com
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