UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report |
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(Date of earliest |
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event reported): February 9, 2016 |
National Research Corporation
(Exact name of registrant as specified in its charter)
Wisconsin |
0-29466 |
47-0634000 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1245 Q Street, Lincoln, Nebraska 68508
(Address of principal executive offices, including zip code)
(402) 475-2525
(Registrant’s telephone number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. |
Results of Operations and Financial Condition. |
On February 9, 2016, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter and year ended December 31, 2015. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.
On February 10, 2016, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the quarter and year ended December 31, 2015. A copy of the script for such conference call and simulcast is furnished as Exhibit 99.2 and is incorporated by reference herein. An archive of such conference call and simulcast and the related question and answer session will be available online at http://edge.media-server.com/m/p/obpo9wir.
Item 9.01. |
Financial Statements and Exhibits. |
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits. The following exhibits are being furnished herewith:
(99.1) | Press Release of National Research Corporation, dated February 9, 2016. | |
(99.2) |
Script for conference call and online Web simulcast, held February 10, 2016. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 10, 2016 |
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NATIONAL RESEARCH CORPORATION | |||
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By: |
/s/ Kevin R. Karas |
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Kevin R. Karas |
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Senior Vice President Finance, Chief Financial Officer, Treasurer and Secretary |
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NATIONAL RESEARCH CORPORATION
Exhibit Index to Current Report on Form 8-K
Dated February 9, 2016
Exhibit
Number
(99.1) Press Release of National Research Corporation, dated February 9, 2016.
(99.2) Script for conference call and online Web simulcast, held February 10, 2016.
-4-
Exhibit 99.1
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1245 “Q” Street Lincoln, NE 68508 Phone: 402-475-2525 Fax: 402-475-9061 |
Contact: |
Kevin R. Karas |
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Chief Financial Officer |
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402-475-2525 |
NATIONAL RESEARCH CORPORATION ANNOUNCES
FOURTH QUARTER AND YEAR-END 2015 RESULTS
Board of Directors Declares Quarterly Dividend
LINCOLN, Nebraska (February 9, 2016) — National Research Corporation (NASDAQ: NRCIA and NRCIB) today announced results for the fourth quarter and year-end 2015.
Fourth Quarter
● |
Net New Sales $6.4 million |
● |
Revenue up 5% to $26.4 million |
● |
Net Income of $5.9 million |
Year-End 2015
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Total Contract Value $110.2 million |
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Net New Sales $24.1 million |
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Revenue up 4% to $102.3 million |
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Net Income of $17.6 million |
Remarking on the upcoming year, Michael D. Hays, chief executive officer of National Research Corporation said, “We start the year with a solid base of contract value largely comprised of core products that have shown consistent growth. Building on that base is our focus.”
Revenue for the quarter ended December 31, 2015, was $26.4 million, compared to $25.1 million for the same quarter in 2014. Net income for the quarter ended December 31, 2015, was $5.9 million, compared to $4.1 million for the same quarter in 2014. Diluted earnings per share increased to $0.14 for Class A shares and $0.84 for Class B shares for the quarter ended December 31, 2015, from diluted earnings per share of $0.10 for Class A shares and $0.58 for Class B shares for the quarter ended December 31, 2014. Combined diluted earnings per share (a non-GAAP measure) increased to $0.24 for the quarter ended December 31, 2015, from $0.17 for the fourth quarter of 2014.
NRC Announces Fourth Quarter and Year-End 2015 Results
Page 2
Februrary 9, 2016
Revenue for the year ended December 31 2015, was $102.3 million, compared to $98.8 million for the same quarter in 2014. Net income for the year ended December 31, 2015, was $17.6 million, compared to $18.2 million for the year ended 2014. Diluted earnings per share decreased to $0.41 for Class A shares and $2.49 for Class B shares for the year ended December 31, 2015, from diluted earnings per share of $0.43 for Class A shares and $2.57 for Class B shares for the year ended December 31, 2014. Combined diluted earnings per share (a non-GAAP measure) decreased to $0.71 for the year ended December 31, 2015, from $0.74 for the year ended 2014.
Regarding fourth quarter performance, Kevin Karas, chief financial officer of National Research Corporation, said, “We were able to significantly leverage our revenue growth to achieve a 20% increase in operating income in the quarter compared to the prior year. In addition, we realized a pre-tax gain of $1.1 million on the sale of our clinical workflow product in the fourth quarter.”
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $.08 (eight cents) per Class A share and $.48 (forty-eight cents) per Class B share payable April 15, 2016, to shareholders of record as of the close of business on March 31, 2016.
A listen-only simulcast of National Research Corporation’s 2015 fourth quarter and year-end conference call will be available online at http://edge.media-server.com/m/p/obpo9wir on February 10, 2016, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately one hour later and continue for 30 days.
For almost 35 years, National Research Corporation has been at the forefront of patient-centered care, helping healthcare providers measure and improve quality and services through analytics that offer a rich understanding of customers’ experiences, preferences, risks and behaviors across the healthcare continuum.
The information discussed within this release includes financial results and projections that are in accordance with accounting principles generally accepted in the United States (GAAP). In addition, certain non-GAAP financial measures have been provided that calculate combined earnings per share based on combined Class A and Class B shares and share equivalents outstanding, respectively. The non-GAAP measures should be read in conjunction with the corresponding GAAP measures and should be considered in addition to, and not as an alternative or substitute for, the measures prepared in accordance with GAAP. Please note that the Company’s non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information the Company presents should be considered in conjunction with, and not as a substitute for, the Company’s financial information presented in accordance with GAAP. The non-GAAP financial measures are provided in an effort to provide information that investors may deem relevant to evaluate results from the company's core business operations and to compare the company's performance with prior periods. The company uses both GAAP and these non-GAAP financial measures for evaluating comparable financial performance against prior periods.
NRC Announces Fourth Quarter and Year-End 2015 Results
Page 3
February 9, 2016
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.
NRC Announces Fourth Quarter and Year-End 2015 Results
Page 4
February 9, 2016
NATIONAL RESEARCH CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three months ended |
Twelve months ended |
|||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||
Revenue |
$ | 26,365 | $ | 25,124 | $ | 102,343 | $ | 98,837 | ||||||||
Operating expenses: |
||||||||||||||||
Direct expenses |
11,365 | 10,848 | 44,610 | 41,719 | ||||||||||||
Selling, general and administrative |
6,294 | 6,863 | 27,177 | 25,018 | ||||||||||||
Depreciation and amortization |
1,000 | 994 | 4,109 | 3,804 | ||||||||||||
Total operating expenses |
18,659 | 18,705 | 75,896 | 70,541 | ||||||||||||
Operating income |
7,706 | 6,419 | 26,447 | 28,296 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
14 | 25 | 60 | 83 | ||||||||||||
Interest expense |
(48 | ) | (69 | ) | (220 | ) | (305 | ) | ||||||||
Other, net |
1,096 | 1 | 1,073 | 18 | ||||||||||||
Total other income (expense) |
1,062 | (43 | ) | 913 | (204 | ) | ||||||||||
Income before income taxes |
8,768 | 6,376 | 27,360 | 28,092 | ||||||||||||
Provision for income taxes |
2,841 | 2,276 | 9,750 | 9,936 | ||||||||||||
Net income |
$ | 5,927 | $ | 4,100 | $ | 17,610 | $ | 18,156 | ||||||||
Earnings Per Share of Common Stock: |
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Basic Earnings Per Share: |
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Class A |
$ | 0.14 | $ | 0.10 | $ | 0.42 | $ | 0.44 | ||||||||
Class B |
$ | 0.85 | $ | 0.59 | $ | 2.52 | $ | 2.62 | ||||||||
Diluted Earnings Per Share: |
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Class A |
$ | 0.14 | $ | 0.10 | $ | 0.41 | $ | 0.43 | ||||||||
Class B |
$ | 0.84 | $ | 0.58 | $ | 2.49 | $ | 2.57 | ||||||||
Weighted average shares and share equivalents outstanding | ||||||||||||||||
Class A - basic |
20,656 | 20,773 | 20,741 | 20,764 | ||||||||||||
Class B - basic |
3,478 | 3,474 | 3,478 | 3,473 | ||||||||||||
Class A - diluted |
20,936 | 21,075 | 20,981 | 21,076 | ||||||||||||
Class B - diluted |
3,523 | 3,529 | 3,523 | 3,536 |
NRC Announces Fourth Quarter and Year-End 2015 Results
Page 5
February 9, 2016
NATIONAL RESEARCH CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share amounts and par value)
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Dec. 31, 2015 |
Dec. 31, 2014 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ | 42,145 | $ | 40,042 | ||||
Accounts receivable, net |
9,808 | 8,116 | ||||||
Income taxes receivable |
157 | 1,100 | ||||||
Other current assets |
4,001 | 3,930 | ||||||
Total Current Assets |
56,111 | 53,188 | ||||||
Property and equipment, net |
11,125 | 12,143 | ||||||
Goodwill |
57,792 | 58,489 | ||||||
Other, net |
4,071 | 5,690 | ||||||
Total Assets |
$ | 129,099 | $ | 129,510 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable and accrued expenses |
$ | 21,834 | $ | 6,028 | ||||
Deferred revenue |
14,843 | 15,095 | ||||||
Accrued compensation |
4,391 | 4,365 | ||||||
Income taxes payable |
701 | 110 | ||||||
Notes payable |
2,402 | 2,328 | ||||||
Total Current Liabilities |
44,171 | 27,926 | ||||||
Non-current Liabilities |
10,706 | 13,836 | ||||||
Total Liabilities |
54,877 | 41,762 | ||||||
Shareholders’ Equity: |
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Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued |
-- | -- | ||||||
Class A Common stock, $0.001 par value; authorized 60,000,000 shares, issued 25,592,812 in 2015 and 25,475,662 in 2014, outstanding 20,848,168 in 2015 and 20,894,286 in 2014 | 26 | 25 | ||||||
Class B Common stock, $0.001 par value; authorized 80,000,000 shares, issued 4,271,413 in 2015 and 4,251,889 in 2014, outstanding 3,510,150 in 2015 and 3,494,865 in 2014 | 4 | 4 | ||||||
Additional paid-in capital |
44,103 | 44,864 | ||||||
Retained earnings |
65,313 | 73,686 | ||||||
Accumulated other comprehensive loss |
(2,995 | ) | (773 | ) | ||||
Treasury stock |
(32,229 | ) | (30,058 | ) | ||||
Total Shareholders’ Equity |
74,222 | 87,748 | ||||||
Total Liabilities and Shareholders’ Equity |
$ | 129,099 | $ | 129,510 |
NRC Announces Fourth Quarter and Year-End 2015 Results
Page 6
February 9, 2016
NATIONAL RESEARCH CORPORATION AND SUBSIDIARIES
Unaudited Non-GAAP Combined Earnings Per Share Schedule
(In thousands, except per share data)
Three months ended |
Twelve months ended |
|||||||||||||||
2015 |
2014 |
2015 |
2014 |
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Combined Earnings Per Share |
||||||||||||||||
Basic Earnings Per Share |
$ | 0.24 | $ | 0.17 | $ | 0.72 | $ | 0.75 | ||||||||
Diluted Earnings Per Share |
$ | 0.24 | $ | 0.17 | $ | 0.71 | $ | 0.74 | ||||||||
Combined weighted average shares and share equivalents outstanding | ||||||||||||||||
Combined - Basic |
24,134 | 24,247 | 24,219 | 24,237 | ||||||||||||
Combined - Diluted |
24,459 | 24,603 | 24,503 | 24,611 |
-END-
Exhibit 99.2
Mike:
Thank you, ___________, and welcome everyone to National Research Corporation’s 2015 fourth quarter and year-end conference call. My name is Mike Hays, the Company’s CEO. Joining me on the call today is Kevin Karas, our Chief Financial Officer.
Before we continue, I would ask Kevin to review conditions related to any forward-looking statements that may be made as part of today’s call.
Kevin.
Kevin :
Thank you, Mike.
This conference call includes forward-looking statements related to the Company that involve 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 facts that could affect the Company's future results, please see the Company's filings with the Securities and Exchange Commission. With that, I’ll turn it back to you, Mike.
Mike:
Thank you, Kevin. And again, welcome everyone.
Our 2015 financial performance can be summarized as strong new sales across our core portfolio of products offset by reductions in contract value in our HRA and Home Health offerings, which resulted in single-digit top-line revenue growth for 2015.
Let me now have Kevin dig into the fourth quarter and year-end results before we turn toward the year ahead.
Kevin
Thank you, Mike.
Net new sales of $6.4 million were added in the fourth quarter 2015, compared to $6.5 million in the fourth quarter 2014. Over the most recent four quarters, net new sales have totaled $24.1 million compared to a total of $22.0 million over the previous four quarters, an increase of 10%. Total contract value for the fourth quarter 2015 ended at $110.2 million, which includes a decrease in contract value of approximately $2.3 million as a result of our clinical workflow product divestiture. Subscription-based revenue agreements represented 89% of total contract value at year end.
Fourth quarter 2015 revenue was $26.4 million, an increase of 5% over the fourth quarter 2014.
Consolidated operating income for the fourth quarter 2015 was $7.7 million or 29% of revenue, compared to $6.4 million, or 26% of revenue for the same period last year.
Total operating expenses for the fourth quarter remained the same at $18.7 million in both 2015 and 2014.
Direct expenses increased to $11.4 million for the fourth quarter 2015, compared to $10.8 million for the same period in 2014, primarily attributed to increased variable direct expenses as a result of revenue growth. Direct expenses as a percent of revenue for the fourth quarter were 43% in both 2015 and 2014. Direct expenses for the full year in 2015 were 43.6% of revenue and are expected to decrease to 43% of revenue for the full year in 2016.
Selling, general and administrative expenses decreased to $6.3 million, or 24% of revenue for the fourth quarter 2015, compared to $6.9 million or 27% of revenue for the same period in 2014. SG&A expenses were 26.8% of revenue for the full year in 2015 and are expected to be 26% of revenue for the full year in 2016.
Depreciation and amortization expense for the fourth quarter was $1.0 million and 4% of revenue in both 2015 and 2014. Depreciation expense as a percent of revenue is expected to continue at 4% of revenue for the full year in 2016.
Other income in the fourth quarter of 2015 included a $1.1 million gain from the sale of our clinical workflow product in December.
The provision for income taxes totaled $2.8 million for the fourth quarter 2015, compared to $2.3 million for the same period in 2014. The effective tax rate was 32.4% for the fourth quarter 2015, compared to 35.7% for the fourth quarter 2014. This decrease was due to the favorable impact of the reversal of a capital loss valuation allowance that was recorded earlier in 2015. The effective income tax rate for the full year 2015 was 35.6% and is expected to remain consistent at 35.6% for the full year 2016.
Net income for the fourth quarter was $5.9 million in 2015, compared to $4.1 million in 2014. Combined non-GAAP diluted earnings per share was $0.24 for the fourth quarter 2015 compared to $0.17 in 2014.
With that I’ll turn the call back to Mike.
Mike:
Thank you, Kevin.
Notwithstanding our single-digit top-line revenue growth for 2015, which all are aware is far below desired performance, we feel our core business is performing very well. The base of contract value going into 2016 is largely comprised of our core product portfolio and our exposure to non-performing products has been minimized.
By all indications, the market dynamics remain highly favorable for NRC products. As well, our offerings remain highly differentiated at point of sale and capital is being allocated to ensure that uniqueness remains far ahead of all comers.
We continue to enjoy an enviable business model of recurring revenue and expanding margins which generates material-free cash flow from which we will continue to invest in our future and provide returns for shareholders.
_______________, I would now like to open the call to questions.
Closing Statement – Mike:
Thank you for your time today. We look forward to reporting our progress next quarter.
6
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