8-K

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

_______________________

Date of Report
(Date of earliest
event reported):	February 13, 2018

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company □

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

Item 2.02. Results of Operations and Financial Condition.

On February 13, 2018, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter and year ended December 31, 2017. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

On February 14, 2018, 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, 2017. 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 https://edge.media-server.com/m6/p/p59zya7p.

Item 9.01. Financial Statements and Exhibits.

(a)       Not applicable.

(b)       Not applicable.

(c)       Not applicable.

(d)       Exhibits. The exhibits listed in the exhibit index below are being furnished herewith.

EXHIBIT INDEX

(99.1)     Press Release of National Research Corporation, dated February 13, 2018.

(99.2)     Script for conference call and online Web simulcast, held February 14, 2018.

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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 14, 2018

NATIONAL RESEARCH CORPORATION
By:	/s/ Kevin R. Karas
	Kevin R. Karas
	Senior Vice President Finance, Chief Financial Officer, Treasurer and Secretary

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EX-99.1

Exhibit 99.1

1245 “Q” Street Lincoln, NE 68508 Phone: 402-475-2525 Fax: 402-475-9061

Contact:	Kevin R. Karas
	Chief Financial Officer
	402-475-2525

NATIONAL RESEARCH CORPORATION ANNOUNCES

FOURTH QUARTER AND YEAR-END 2017 RESULTS

LINCOLN, Nebraska (February 13, 2018) — National Research Corporation (NASDAQ: NRCIA and NRCIB) today announced results for the fourth quarter and year end 2017.

Fourth Quarter

● Net New Sales $6.2 million

● Revenue up 5% to $29.9 million

● Net Income increased 14% to $6.5 million

Year-End 2017

● Net New Sales $22.2 million

● Revenue up 7% to $117.6 million

● Net Income increased 12% to $22.9 million

● Total Contract Value $125.1 million

Revenue for the fourth quarter ended December 31, 2017, was $29.9 million, compared to $28.4 million for the same quarter in 2016. Net income for the quarter ended December 31, 2017, was $6.5 million, compared to $5.7 million for the quarter ended December 31, 2016. Diluted earnings per share increased to $0.15 for Class A shares and $0.90 for Class B shares for the quarter ended December 31, 2017, from $0.13 for Class A shares and $0.80 for Class B shares for the quarter ended December 31, 2016.

Revenue for the year ended December 31, 2017, was $117.6 million, compared to $109.4 million for the same quarter in 2016. Net income for the year ended December 31, 2017, was $22.9 million, compared to $20.5 million for the year ended 2016. Diluted earnings per share increased to $0.52 for Class A shares and $3.18 for Class B shares for the year ended December 31, 2017, from diluted earnings per share of $0.48 for Class A shares and $2.88 for Class B shares for the year ended December 31, 2016.

NRC Announces Fourth Quarter 2017 Results

Page 2

February 13, 2018

Regarding the Company’s financial performance, Kevin Karas, chief financial officer of National Research Corporation, said, “We are encouraged by our growth in quarterly net new sales performance, achieving $6.2 million in the fourth quarter. Our financial results for the fourth quarter include approximately $500,000 in additional expenses for our proposed recapitalization, as well as a net tax benefit of $1.1 million for the initial estimated impact of the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act”) and our recent decision to repatriate certain foreign earnings. We continue to analyze the impact of the Tax Act and will make adjustments as we complete our analysis during 2018.”

A listen-only simulcast of National Research Corporation’s 2017 fourth quarter conference call will be available online at https://edge.media-server.com/m6/p/p59zya7pon February 14, 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 36 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.

-END-

NRC Announces Fourth Quarter 2017 Results

Page 3

February 13, 2018

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share data)

	Three months ended						Twelve months ended
	December 31,						December 31,
	2017			2016			2017			2016
Revenue	$	29,897		$	28,368		$	117,559		$	109,384
Operating expenses:
Direct expenses		12,362			11,836			49,068			45,577
Selling, general and administrative		7,665			6,619			29,686			28,385
Depreciation and amortization		1,209			1,079			4,586			4,225
Total operating expenses		21,236			19,534			83,340			78,187
Operating income		8,661			8,834			34,219			31,197
Other income (expense):
Interest income		38			13			96			47
Interest expense		(13	)		(32	)		(82	)		(190	)
Other, net		(27	)		190			50			302
Total other income (expense)		(2	)		171			64			159
Income before income taxes		8,659			9,005			34,283			31,356
Provision for income taxes		2,142			3,280			11,340			10,838
Net income	$	6,517		$	5,725		$	22,943		$	20,518
Earnings Per Share of Common Stock:
Basic Earnings Per Share:
Class A	$	0.15		$	0.14		$	0.54		$	0.49
Class B	$	0.93		$	0.82		$	3.26		$	2.93
Diluted Earnings Per Share:
Class A	$	0.15		$	0.13		$	0.52		$	0.48
Class B	$	0.90		$	0.80		$	3.18		$	2.88
Weighted average shares and share equivalents outstanding
Class A - basic		20,802			20,717			20,770			20,713
Class B - basic		3,515			3,511			3,514			3,505
Class A - diluted		21,843			21,118			21,627			21,037
Class B - diluted		3,625			3,569			3,603			3,560

-END-

NRC Announces Fourth Quarter 2017 Results

Page 4

February 13, 2018

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share amounts and par value)

	Dec. 31,			Dec. 31,
	2017			2016
ASSETS
Current Assets:
Cash and cash equivalents	$	34,733		$	33,021
Accounts receivable, net		13,343			10,864
Income taxes receivable		375			14
Other current assets		3,808			3,166
Total Current Assets		52,259			47,065
Property and equipment, net		12,359			11,806
Goodwill		58,021			57,861
Other, net		4,677			3,892
Total Assets	$	127,316		$	120,624
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	3,546		$	3,916
Deferred revenue		16,878			15,497
Accrued compensation		6,597			4,543
Dividends payable		4,222			4,213
Income taxes payable		--			662
Notes payable		1,067			2,683
Total Current Liabilities		32,310			31,514
Non-Current Liabilities		4,965			6,304
Total Liabilities		37,275			37,818
Shareholders’ Equity:
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 25,835,230 in 2017 and 25,656,760 in 2016, outstanding 20,936,703 in 2017 and 20,891,069 in 2016		26			26
Class B Common stock, $0.001 par value; authorized 80,000,000 shares, issued 4,319,256 in 2017 and 4,308,875 in 2016, outstanding 3,535,238 in 2017 and 3,539,931 in 2016		4			4
Additional paid-in capital		51,025			46,725
Retained earnings		77,574			71,507
Accumulated other comprehensive loss		(1,635	)		(2,626	)
Treasury stock		(36,953	)		(32,830	)
Total Shareholders’ Equity		90,041			82,806
Total Liabilities and Shareholders’ Equity	$	127,316		$	120,624

-END- 

EX-99.2

Exhibit 99.2

Mike:

Thank you, ___________, and welcome everyone to National Research Corporation’s 2017 fourth quarter and year-end earnings call. My name is Mike Hays, the Company’s CEO. Joining me on the call today is Kevin Karas, our Chief Financial Officer.

I would like to ask Kevin to review with us conditions regarding any forward looking statements that may be made as part of our call today.

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.

Mike.

Mike:

Thanks, and again, welcome everyone. For our call today, Kevin has some prepared remarks regarding our 2017fourth quarter and year end performanceafter which, we will be going directly to any questions you may have. Please feel free to enter the question que as Kevin shares our financial performance highlights.

Kevin.

Kevin:

Thanks, Mike.

Total contract value at the end of the fourth quarter totaled $125.1 million, representing 5% growth over the same period last year. Healthcare system clients with agreements for multiple solutions represented 22% of our client base at the end of the fourth quarter 2017, up from 20% at the same time last year. Subscription-based revenue agreements at the end of the fourth quarter of 2017 represented 93% of the total recurring contract value.

Fourth quarter 2017 revenue was $29.9 million, an increase of 5% over the fourth quarter of 2016, and was comprised entirely of organic growth from adding new clients and increasing contract value for existing clients.

Consolidated operating income for the fourth quarter 2017 was $8.7 million or 29% of revenue, compared to $8.8 million, or 31% of revenue for the same period last year.

Total operating expenses increased by 9% to $21.2 million for the fourth quarter 2017, compared to $19.5 million for the same period last year.

Direct expenses increased 4% to $12.4 million for the fourth quarter 2017, up from $11.8 million for the same period in 2016. Direct expenses as a percent of revenue decreased slightly to 41% of revenue for the fourth quarter 2017 compared to 42% in 2016. Our variable direct expenses as a percent of revenue decreased compared to last year as incremental variable cost of product expenses from revenue growth in the quarter were offset by decreased expenses from changes in data collection methodologies. At the same time, our fixed direct expenses increased as additional resources were allocated for client services.

Selling, general and administrative expenses increased to $7.7 million for the fourth quarter 2017, compared to $6.6 million for the same period last year. SG&A expenses in 2017 increased mainly due to higher salary and benefit costs of $662,000 and $391,000 of additional expenses associated with the proposed recapitalization. SG&A expenses were 26% of revenue for the fourth quarter of 2017 compared to 23% of revenue for the same period in 2016.

Depreciation and amortization expenses increased to $1.2 million for the fourth quarter 2017 compared to $1.1 million for the same period in 2016 mainly due to increased depreciation from additional computer software investments. Depreciation and amortization expenses were 4% of revenue for the fourth quarter 2017.

The provision for income taxes totaled $2.1 million for the fourth quarter 2017, compared to $3.3 million for the same period in 2016. The effective tax rate was 25% for the fourth quarter 2017, compared to 36% for the same period in 2016. The decrease in the effective rate was mainly due to a net tax benefit of $1.1 million for the initial estimated impact of the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act”) and our recent decision to repatriate certain foreign earnings. This Tax Act adjustment was partially offset by non-deductible recapitalization expenses increasing tax expense by $143,000. We continue to analyze the impact of the Tax Act and will make adjustments as we complete our analysis during 2018.

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Net income for the fourth quarter was $6.5 million in 2017, compared to $5.7 million in 2016. Diluted earnings per share increased to $0.25 for Class A shares and $0.90 for Class B shares for the quarter ended December 31, 2017, up from $0.23 for Class A shares and $0.83 for Class B shares for the quarter ended December 31, 2016.

With that I’ll turn the call back to Mike.

Mike:

Thank you, Kevin.

This completes our prepared remarks so I will now ask _______________, to open the call to questions.

Closing Statement – Mike:

Thank you for your time today. We look forward to reporting our progress next quarter.

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