National Research Corporation Announces Fourth Quarter and Year-End 2018 Results
February 12 2019 - 5:00PM
National Research Corporation (NASDAQ:NRC) today announced results
for the fourth quarter and year end 2018.
Voice of Customer (VoC)
Platform solutions reach $75 million
- VoC Platform contract value growth more than doubles in past 24
months
- VoC Platform adoption helps double Transparency solution
contract value
- VoC Platform solution contract value now accounts for 57% of
the business
Fourth quarter
highlights
- Net New Sales of $7.6 million
- Net Income increased to $7.8 million
Year-end 2018 highlights
- Total Contract Value of $131.4 million
- Net Income increased to $30.0 million
Commenting on the milestone achieved at year-end
2018, Michael D. Hays, chief executive officer of National Research
Corporation said, “Over just the past 24 months, the Company has
shifted the mix of business among current clients from legacy
methods of experience measurement and CAHPS compliance spend to our
VoC platform with embedded tools such as Transparency, to drive
revenue and customer communities for co-producing care experiences.
This higher value strategic offering now accounts for more than
half of our business and an unmatched advantage at point of
sale.”
The VoC Platform solutions are decreasing
variable direct expense and expanding our gross margin. In
addition, solution cross-sell and organic contract value growth is
accelerating as our customers realize greater value from leveraging
multiple VoC Platform solutions to drive customer loyalty for their
organizations. Revenue from VoC Platform solutions for the year
ended December 31, 2018, grew by 49% over the prior year and
accounted for 50% of total revenue in 2018 compared to 34% of total
revenue in 2017.
Revenue for the fourth quarter ended December
31, 2018, was $30.6 million, compared to $29.9 million for the same
quarter in 2017. Net income for the quarter ended December 31,
2018, was $7.8 million, compared to $6.5 million for the quarter
ended December 31, 2017. Diluted earnings per share increased to
$0.30 for the common stock (formerly Class A) for the quarter ended
December 31, 2018, from diluted earnings per share of $0.15 for
Class A shares and $0.90 for Class B shares for the quarter ended
December 31, 2017. Due to the recapitalization transaction on April
17, 2018, income has been allocated to both classes of shares
through April 16 and allocated only to common stock (formerly Class
A) after April 16.
Revenue for the year ended December 31, 2018,
was $119.7 million, compared to $117.6 million for the same quarter
in 2017. Net income for the year ended December 31, 2018, was $30.0
million, compared to $22.9 million for the year ended 2017. Diluted
earnings per share increased to $1.04 for the common stock
(formerly Class A) and decreased to $1.27 for Class B shares for
the year ended December 31, 2018, from diluted earnings per share
of $0.52 for Class A shares and $3.18 for Class B shares for the
year ended December 31, 2017.
Regarding the Company’s fourth quarter financial
performance, Kevin Karas, chief financial officer of National
Research Corporation, said, “The record high net new sales reflect
the growing adoption of our solutions to build customer loyalty in
the healthcare market. Our operating income margin for the quarter
increased to 31% of revenue as we continued to successfully
leverage our revenue growth.”
A listen-only simulcast of National Research
Corporation’s 2018 fourth quarter and year-end conference call will
be available online at http://edge.media-server.com/m6/p/uohfqr6w
on February 13, 2018, beginning at 11:00 a.m. Eastern time. The
online replay will follow approximately one hour later and continue
for 30 days.
For more than 37 years, National Research
Corporation has been a leading provider of analytics and insights
that facilitate measurement and improvement of the patient and
employee experience while also increasing patient engagement and
customer loyalty for healthcare providers, payers and other
healthcare organizations in the United States and Canada. The
Company’s solutions enable its clients to understand the voice of
the customer with greater clarity, immediacy and depth.
This press release includes “forward-looking”
statements related to the Company that can generally be identified
as describing the Company’s future plans, objectives or
goals. Such forward-looking statements are subject to risks
and uncertainties that could cause actual results or outcomes to
differ materially from those currently anticipated. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. For further information about the factors that could
affect the Company’s future results, please see the Company’s
filings with the Securities and Exchange Commission.
NATIONAL RESEARCH CORPORATION
AND SUBSIDIARY |
Unaudited Condensed Consolidated Statements of
Income |
(In thousands, except per share data) |
|
|
Three months ended December 31, |
|
Twelve months ended December 31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
30,639 |
|
|
$ |
29,897 |
|
|
$ |
119,686 |
|
|
$ |
117,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
expenses |
|
11,892 |
|
|
|
12,362 |
|
|
|
47,577 |
|
|
|
49,068 |
|
Selling,
general and administrative |
|
7,885 |
|
|
|
7,665 |
|
|
|
31,371 |
|
|
|
29,686 |
|
Depreciation and amortization |
|
1,467 |
|
|
|
1,209 |
|
|
|
5,463 |
|
|
|
4,586 |
|
Total
operating expenses |
|
21,244 |
|
|
|
21,236 |
|
|
|
84,411 |
|
|
|
83,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
9,395 |
|
|
|
8,661 |
|
|
|
35,275 |
|
|
|
34,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
6 |
|
|
|
38 |
|
|
|
62 |
|
|
|
96 |
|
Interest
expense |
|
(522 |
) |
|
|
(13 |
) |
|
|
(1,513 |
) |
|
|
(82 |
) |
Other,
net |
|
661 |
|
|
|
(27 |
) |
|
|
885 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other income (expense) |
|
145 |
|
|
|
(2 |
) |
|
|
(566 |
) |
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes |
|
9,540 |
|
|
|
8,659 |
|
|
|
34,709 |
|
|
|
34,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
1,739 |
|
|
|
2,142 |
|
|
|
4,662 |
|
|
|
11,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
7,801 |
|
|
$ |
6,517 |
|
|
$ |
30,047 |
|
|
$ |
22,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
A |
$ |
0.32 |
|
|
$ |
0.15 |
|
|
$ |
1.08 |
|
|
$ |
0.54 |
|
Class
B |
$ |
-- |
|
|
$ |
0.93 |
|
|
$ |
1.31 |
|
|
$ |
3.26 |
|
Diluted
Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
A |
$ |
0.30 |
|
|
$ |
0.15 |
|
|
$ |
1.04 |
|
|
$ |
0.52 |
|
Class
B |
$ |
-- |
|
|
$ |
0.90 |
|
|
$ |
1.27 |
|
|
$ |
3.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
and share equivalents outstanding Class A - basic |
|
24,684 |
|
|
|
20,802 |
|
|
|
23,562 |
|
|
|
20,770 |
|
Class B -
basic |
|
-- |
|
|
|
3,515 |
|
|
|
3,527 |
|
|
|
3,514 |
|
Class A -
diluted |
|
25,534 |
|
|
|
21,843 |
|
|
|
24,448 |
|
|
|
21,627 |
|
Class B -
diluted |
|
-- |
|
|
|
3,625 |
|
|
|
3,628 |
|
|
|
3,603 |
|
|
NATIONAL RESEARCH CORPORATION AND
SUBSIDIARY |
Unaudited Condensed Consolidated Balance
Sheets |
(Dollars in thousands, except per share amounts and par
value) |
|
|
|
|
|
Dec. 31, |
|
Dec. 31, |
|
2018 |
|
2017 |
ASSETS |
Current Assets: |
|
|
|
Cash and cash
equivalents |
$ |
12,991 |
|
|
$ |
34,733 |
|
Accounts
receivable, net |
|
11,922 |
|
|
|
14,806 |
|
Income
taxes receivable |
|
-- |
|
|
|
375 |
|
Other
current assets |
|
3,149 |
|
|
|
2,345 |
|
Total
Current Assets |
|
28,062 |
|
|
|
52,259 |
|
|
|
|
|
Property and equipment,
net |
|
14,153 |
|
|
|
12,359 |
|
Goodwill |
|
57,831 |
|
|
|
58,021 |
|
Other, net |
|
7,638 |
|
|
|
4,677 |
|
Total
Assets |
$ |
107,684 |
|
|
$ |
127,316 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
Liabilities: |
|
|
|
Accounts
payable and accrued expenses |
$ |
3,651 |
|
|
$ |
3,546 |
|
Deferred
revenue |
|
16,244 |
|
|
|
16,878 |
|
Accrued
compensation |
|
5,798 |
|
|
|
6,597 |
|
Dividends
payable |
|
17,113 |
|
|
|
4,222 |
|
Income
taxes payable |
|
288 |
|
|
|
-- |
|
Notes
payable |
|
3,667 |
|
|
|
1,067 |
|
Total
Current Liabilities |
|
46,761 |
|
|
|
32,310 |
|
|
|
|
|
Non-Current
Liabilities |
|
41,840 |
|
|
|
4,965 |
|
|
|
|
|
Total
Liabilities |
|
88,601 |
|
|
|
37,275 |
|
|
|
|
|
Shareholders’
Equity: |
|
|
|
Preferred
stock, $0.01 par value, authorized 2,000,000 shares, none
issued |
|
-- |
|
|
|
-- |
|
Common
stock (formerly Class A Common stock), $0.001 par value; authorized
60,000,000 shares, issued 29,917,667 in 2018 and 25,835,230 in
2017, outstanding 24,800,796 in 2018 and 20,936,703 in 2017 |
|
30 |
|
|
|
26 |
|
Class B
Common stock, $0.001 par value; 4,319,256 issued and 3,535,238
outstanding in 2017 |
|
-- |
|
|
|
4 |
|
Additional paid-in capital |
|
157,312 |
|
|
|
51,025 |
|
Retained
earnings |
|
(106,339 |
) |
|
|
77,574 |
|
Accumulated other comprehensive loss |
|
(2,916 |
) |
|
|
(1,635 |
) |
Treasury
stock |
|
(29,004 |
) |
|
|
(36,953 |
) |
Total
Shareholders’ Equity |
|
19,083 |
|
|
|
90,041 |
|
Total
Liabilities and Shareholders’ Equity |
$ |
107,684 |
|
|
$ |
127,316 |
|
|
Contact: Kevin R. Karas
Chief Financial Officer
402-475-2525
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