National Research Corporation Announces Second Quarter and Year-To-Date 2020 Results
August 04 2020 - 5:00PM
National Research Corporation (NASDAQ:NRC) today announced results
for the second quarter of 2020.
Revenue for the quarter ended June 30, 2020, was
$31.2 million, compared to $31.4 million for the quarter ended June
30, 2019. Operating income was $9.3 million for the second quarter
2020 compared to $10.1 million for the same quarter 2019. In
response to special circumstances among clients hard hit by
COVID-19, we elected to provide uncompensated services which
reduced revenue without a corresponding offset in expenses, thus
impacting operating income. All such impacted clients have resumed
compensated services as planned to date and many extended contract
terms in recognition of the support provided by NRC Health
resulting, we believe, in a stronger partnership. We salute all
essential caregivers and are glad we could offer this support.
Net income for the quarter ended June 30, 2020,
was $7.7 million, compared to $7.4 million for the quarter ended
June 30, 2019. Diluted earnings per share increased to $0.30 for
the quarter ended June 30, 2020, from diluted earnings per share of
$0.29 for the quarter ended June 30, 2019. Results for the second
quarter 2020 included an income tax provision of $842,000 compared
with $2.1 million for the same quarter 2019.
Demand for our product portfolio remains strong.
Net New Sales were up 6% in the second quarter and 19% year-to-date
2020 compared to 2019, despite a pivot to virtual sales efforts.
Based on recent wins, we believe our offerings are highly
differentiated in our clients’ eyes against competitive offerings
from firms outside of the healthcare industry and legacy vendors
within. Case in point, we added healthcare brands Partners
HealthCare and Orlando Health this quarter, each seven-figure
takeaways from Press Ganey. We believe every added client deepens
our moat and brings additive value to all current partners through
the network effect.
Total Recurring Contract Value increased 11% in the second
quarter 2020, a subset of which is our digital Voice of the
Customer offering. VOC now comprises $107 million of Contract
Value, up 30% year-over-year. We believe the efficiencies inherent
in this digital platform lead to long-term margin improvements, a
hallmark of our financial performance, notwithstanding the current
quarter impact of COVID-19. Our Voice of the Customer offerings,
being uniquely personalized to healthcare, contribute to higher
client retention rates as well, compounding the enhancing
visibility of recurring revenue streams.
It goes without saying that COVID-19 is far from
behind us and we continue to recognize and support the work of our
healthcare partners and caregivers worldwide. NRC Health retains
its conservative stance regarding liquidity for the security of our
associates and optionality as a business. Accordingly, our Board of
Directors has determined not to pay a dividend for the current
quarter.
A listen-only simulcast of National Research
Corporation’s 2020 second quarter conference call will be available
online at https://edge.media-server.com/mmc/p/ayrm72gm on August 5,
2020, 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 39 years, National Research
Corporation has been a leading provider of analytics and insights
that facilitate measurement and improvement of human
understanding.
This press release contains certain statements
that may be considered forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and such statements are subject to the safe harbor created by those
sections and the Private Securities Litigation Reform Act of 1995,
as amended. Such statements may be identified by their use of terms
or phrases such as “believes,” derivations thereof, and similar
terms and phrases. Forward-looking statements are based upon the
current beliefs and expectations of our management and are
inherently subject to risks and uncertainties, some of which cannot
be predicted or quantified, which could cause future events and
actual results to differ materially from those set forth in,
contemplated by, or underlying the forward-looking statements,
including those risks and uncertainties as set forth in the Risk
Factors section of our Annual Report on Form 10-K for the year
ended December 31, 2019, our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020, and various disclosures in our press
releases, stockholder reports, and other filings with the
Securities and Exchange Commission. In this press release, the
statements relating to the future status of our partnership with
clients and the future impact of adding additional clients are
forward-looking statements. We disclaim any obligation to update or
revise any forward-looking statements to reflect actual results or
changes in the factors affecting the forward-looking
information.
Contact: |
Kevin R. Karas |
|
Chief Financial Officer |
|
402-475-2525 |
NATIONAL RESEARCH
CORPORATION AND
SUBSIDIARYUnaudited Condensed
Consolidated Statements of Income(In thousands, except per
share data)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
Revenue |
$ |
31,166 |
|
|
$ |
31,414 |
|
|
$ |
65,026 |
|
|
$ |
62,894 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Direct expenses |
|
11,634 |
|
|
|
11,506 |
|
|
|
24,180 |
|
|
|
23,160 |
|
Selling, general and administrative |
|
8,852 |
|
|
|
8,319 |
|
|
|
17,600 |
|
|
|
16,026 |
|
Depreciation and amortization |
|
1,405 |
|
|
|
1,440 |
|
|
|
2,777 |
|
|
|
2,855 |
|
Total operating expenses |
|
21,891 |
|
|
|
21,265 |
|
|
|
44,557 |
|
|
|
42,041 |
|
|
|
|
|
|
Operating income |
|
9,275 |
|
|
|
10,149 |
|
|
|
20,469 |
|
|
|
20,853 |
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
Interest income |
|
2 |
|
|
|
8 |
|
|
|
13 |
|
|
|
14 |
|
Interest expense |
|
(450 |
) |
|
|
(533 |
) |
|
|
(914 |
) |
|
|
(1,103 |
) |
Other, net |
|
(270 |
) |
|
|
(139 |
) |
|
|
360 |
|
|
|
(419 |
) |
|
|
|
|
|
Total other expense |
|
(718 |
) |
|
|
(664 |
) |
|
|
(541 |
) |
|
|
(1,508 |
) |
|
|
|
|
|
Income before income taxes |
|
8,557 |
|
|
|
9,485 |
|
|
|
19,928 |
|
|
|
19,345 |
|
|
|
|
|
|
Provision for income taxes |
|
842 |
|
|
|
2,092 |
|
|
|
458 |
|
|
|
3,756 |
|
|
|
|
|
|
Net income |
$ |
7,715 |
|
|
$ |
7,393 |
|
|
$ |
19,470 |
|
|
$ |
15,589 |
|
|
|
|
|
|
Earnings Per Share of Common Stock: |
|
|
|
|
|
|
|
|
|
Basic Earnings Per Share |
$ |
0.31 |
|
|
$ |
0.30 |
|
|
$ |
0.78 |
|
|
$ |
0.63 |
|
Diluted Earnings Per Share |
$ |
0.30 |
|
|
$ |
0.29 |
|
|
$ |
0.76 |
|
|
$ |
0.61 |
|
|
|
|
|
|
Weighted average shares and share equivalents outstanding
Basic |
|
25,148 |
|
|
|
24,789 |
|
|
|
25,060 |
|
|
|
24,777 |
|
Diluted |
|
25,680 |
|
|
|
25,586 |
|
|
|
25,702 |
|
|
|
25,549 |
|
NATIONAL RESEARCH
CORPORATION AND
SUBSIDIARYUnaudited Condensed
Consolidated Balance Sheets(Dollars in thousands, except
share amounts and par value)
|
June 30, 2020 |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
11,957 |
|
|
$ |
13,517 |
|
Accounts receivable, net |
|
19,882 |
|
|
|
11,639 |
|
Income taxes receivable |
|
272 |
|
|
|
69 |
|
Other current assets |
|
4,586 |
|
|
|
3,932 |
|
Total current assets |
|
36,697 |
|
|
|
29,157 |
|
|
|
|
|
|
|
|
|
Net property and equipment |
|
12,355 |
|
|
|
13,530 |
|
Goodwill |
|
57,829 |
|
|
|
57,935 |
|
Other, net |
|
9,900 |
|
|
|
10,063 |
|
Total assets |
$ |
116,781 |
|
|
$ |
110,685 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Notes payable |
$ |
3,966 |
|
|
$ |
4,378 |
|
Accounts payable and accrued expenses |
|
3,882 |
|
|
|
4,687 |
|
Accrued compensation |
|
6,830 |
|
|
|
6,086 |
|
Income taxes payable |
|
308 |
|
|
|
366 |
|
Dividends payable |
|
-- |
|
|
|
5,239 |
|
Deferred revenue |
|
16,275 |
|
|
|
16,354 |
|
Other current liabilities |
|
1,007 |
|
|
|
1,045 |
|
Total current liabilities |
|
32,268 |
|
|
|
38,155 |
|
|
|
|
|
|
|
|
|
Notes payable, net of current portion |
|
28,627 |
|
|
|
29,795 |
|
Other non-current liabilities |
|
10,312 |
|
|
|
9,843 |
|
Total liabilities |
|
71,207 |
|
|
|
77,793 |
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none
issued |
|
-- |
|
|
|
-- |
|
Common stock, $0.001 par value; authorized 60,000,000 shares,
issued 30,553,546 in 2020 and 30,151,574 in 2019, outstanding
25,235,123 in 2020 and 24,947,500 in 2019 |
|
31 |
|
|
|
30 |
|
Additional paid-in capital |
|
167,808 |
|
|
|
162,154 |
|
Retained earnings (accumulated deficit) |
|
(79,165 |
) |
|
|
(93,357 |
) |
Accumulated other comprehensive loss, foreign currency translation
adjustment |
|
(2,872 |
) |
|
|
(2,209 |
) |
Treasury stock |
|
(40,228 |
) |
|
|
(33,726 |
) |
Total shareholders’ equity |
|
45,574 |
|
|
|
32,892 |
|
Total liabilities and shareholders’ equity |
$ |
116,781 |
|
|
$ |
110,685 |
|
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