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Tyler Technologies Reports Earnings For Third Quarter 2012

Stocks in this article: TYL

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our customers, primarily local and state governments, that could negatively impact information technology spending; (2) our ability to achieve our financial forecasts due to various factors, including project delays by our customers, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (3) economic, political and market conditions, including the recent global economic and financial crisis, and the general tightening of access to debt or equity capital; (4) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (5) our ability to successfully complete acquisitions and achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (6) competition in the industry in which we conduct business and the impact of competition on pricing, customer retention and pressure for new products or services; (7) the ability to attract and retain qualified personnel and dealing with the loss or retirement of key members of management or other key personnel; and (8) costs of compliance and any failure to comply with government and stock exchange regulations. A detailed discussion of these factors and other risks that affect our business are described in our filings with the Securities and Exchange Commission, including the detailed “Risk Factors” contained in our most recent annual report on Form 10-K. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.

 
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands, except per share data)
(Unaudited)
                 
 
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
Revenues:
Software licenses $ 8,704 $ 7,631 $ 24,440 $ 22,761
Subscriptions 11,335 7,989 31,856 22,230
Software services 22,099 17,644 62,366 52,400
Maintenance 44,452 37,011 126,362 107,579
Appraisal services 5,594 5,761 17,047 17,945
Hardware and other   1,661   1,148   5,865   4,397
Total revenues 93,845 77,184 267,936 227,312
 
Cost of revenues:
Software licenses 458 536 1,508 2,320
Acquired software 478 243 1,370 782
Software services, maintenance and subscriptions 43,485 35,689 126,416 106,371
Appraisal services 3,598 3,776 11,270 11,302
Hardware and other   882   808   4,310   3,645
Total cost of revenues 48,901 41,052 144,874 124,420
 
Gross profit 44,944 36,132 123,062 102,892
 
Selling, general and administrative expenses 20,909 18,755 63,943 54,509
Research and development expense 4,273 4,196 14,775 13,780
Amortization of customer and trade name intangibles   1,103   801   3,186   2,408
Operating income 18,659 12,380 41,158 32,195
Other expense, net   849   562   2,325   1,586
Income before income taxes 17,810 11,818 38,833 30,609
Income tax provision   6,978   4,312   15,215   11,751
Net income $ 10,832 $ 7,506 $ 23,618 $ 18,858
 
Earnings per common share:
Basic $ 0.36 $ 0.24 $ 0.78 $ 0.60
Diluted $ 0.33 $ 0.23 $ 0.72 $ 0.57
 
Comprehensive income $ 10,914 $ 7,506 $ 23,700 $ 18,858
 
 
EBITDA (1) $ 21,625 $ 14,823 $ 50,203 $ 39,572
 
Weighted average common shares outstanding:
Basic 30,387 31,097 30,267 31,247
Diluted 32,986 32,960 32,838 33,027
 
 
(1) Reconciliation of EBITDA Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
Net income $ 10,832 $ 7,506 $ 23,618 $ 18,858
Amortization of customer and trade name intangibles 1,103 801 3,186 2,408

Depreciation and other amortization included in cost of revenues, SG&A and other expenses

2,177 1,758 6,430 5,370
Interest expense included in other expense, net 535 446 1,754 1,185
Income tax provision   6,978   4,312   15,215   11,751
EBITDA $ 21,625 $ 14,823 $ 50,203 $ 39,572
 
 
 
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
         
 
 
September 30
2012 December 31,
(Unaudited) 2011
ASSETS
 
Current assets:
Cash and cash equivalents $ 103 $ 1,326
Short-term investments available-for-sale - 25
Accounts receivable, net 78,218 90,012
Other current assets 10,692 10,634
Deferred income taxes   5,051   5,095
Total current assets 94,064 107,092
 
Accounts receivable, long-term portion 681 2,095
Property and equipment, net 43,017 40,915
Non-current investments available-for-sale 2,029 1,953
 
Other assets:
Goodwill and other intangibles, net 155,069 141,722
Other   1,234   1,614
 
Total assets $ 296,094 $ 295,391
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
Accounts payable and accrued liabilities $ 24,527 $ 27,962
Deferred revenue   120,127   123,678
Total current liabilities 144,654 151,640
 
Revolving line of credit 28,000 60,700
Deferred income taxes 5,431 4,941
Shareholders' equity   118,009   78,110
 
Total liabilities and shareholders' equity $ 296,094 $ 295,391
 
 
 
TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
         
 
Nine months ended September 30,
2012 2011
Cash flows from operating activities:
Net income $ 23,618 $ 18,858
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 9,616 7,778
Share-based compensation expense 5,506 4,585
Excess tax benefit from exercise of share-based arrangements (3,283 ) (1,721 )
Changes in operating assets and liabilities, exclusive of
effects of acquired companies   6,797     15,605  
Net cash provided by operating activities   42,254     45,105  
 
Cash flows from investing activities:
Proceeds from sales of investments 75 50
Cost of acquisitions, net of cash acquired (15,229 ) -
Additions to property and equipment (6,351 ) (9,926 )
Decrease in other   41     199  
Net cash used by investing activities   (21,464 )   (9,677 )
 
Cash flows from financing activities:
(Decrease) increase in net borrowings on revolving line of credit (32,700 ) 31,500
Purchase of treasury shares - (68,525 )
Contributions from employee stock purchase plan 1,832 1,472
Proceeds from exercise of stock options 5,572 1,570
Excess tax benefit from exercise of share-based arrangements   3,283     1,721  
Net cash used by financing activities   (22,013 )   (32,262 )
 
Net (decrease) increase in cash and cash equivalents (1,223 ) 3,166
Cash and cash equivalents at beginning of period   1,326     2,114  
 
Cash and cash equivalents at end of period $ 103   $ 5,280  
 
 
Reconciliation of free cash flow: Nine months ended September 30,
2012 2011
Cash provided by operating activities $ 42,254 $ 45,105
Capital expenditures   (6,351 )   (9,926 )
Free cash flow 35,903 35,179
Capital expenditures for real estate   3,078     6,657  
Free cash flow, excluding real estate $ 38,981   $ 41,836  




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