EX-99.1 2 jkhy-9302015exhibit99press.htm PRESS RELEASE DATED NOVEMBER 4, 2015 Exhibit
JKHY First Quarter Fiscal 2016 Net Income Increases 11%
November 4, 2015

Jack Henry & Associates, Inc.
Analyst & IR Contact:
Kevin D. Williams
 663 Highway 60, P.O. Box 807
 
Chief Financial Officer
 Monett, MO 65708
 
(417) 235-6652

FOR IMMEDIATE RELEASE

JACK HENRY & ASSOCIATES FIRST QUARTER FISCAL 2016 ENDS WITH
11% INCREASE IN NET INCOME

Monett, MO, November 4, 2015 - Jack Henry & Associates, Inc. (NASDAQ: JKHY), a leading provider of technology solutions and payment processing services primarily for the financial services industry, today announced first quarter fiscal 2016 results. Total revenue increased 7% compared to the prior fiscal year to $321.6 million and gross profit increased 9% to $138.0 million. Net income rose 11% compared to the prior fiscal year to $51.4 million.
For the quarter ended September 30, 2015, the company generated total revenue of $321.6 million compared to $301.5 million in the same quarter a year ago. Gross profit increased to $138.0 million from $126.6 million in the first quarter of last fiscal year. Net income in the current quarter was $51.4 million, or $0.64 per diluted share, compared to $46.1 million, or $0.56 per diluted share in the same quarter a year ago.
According to Jack Prim, CEO, “We are pleased to announce another quarter of record revenue and earnings and strong organic revenue growth. On the heels of two successful fall user conferences for JHA Banking and Symitar, we are encouraged about the rest of the year."
Operating Results
License revenue for the first quarter increased to $1.6 million from $0.5 million in the first quarter a year ago and was less than 1% of revenue in both periods. Support and service revenue grew in the quarter compared to the prior year, increasing 7% to $307.7 million, or 96% of total revenue in the first quarter of fiscal 2016 from $288.2 million, or 96% of total revenue for the same period a year ago. Hardware sales in the first quarter of fiscal 2016 decreased 4% to $12.3 million, or 4% of total revenue, from $12.8 million, or 4% of total revenue, in the first quarter of last fiscal year.
Cost of sales for the first quarter increased 5% to $183.7 million from $174.9 million in the first quarter of fiscal 2015. Gross profit increased 9% to $138.0 million for the first quarter this fiscal year from $126.6 million last year. Gross margin was 43% in the first quarter compared to 42% in the same quarter last year.
Gross margin on license revenue for the first quarter of fiscal 2016 was 89% compared to 19% for the same quarter of fiscal 2015. Support and service gross margin was 43% in the first quarter of fiscal 2016, matching the 43% in the first quarter of fiscal 2015. Hardware gross margins increased for the first quarter to 29% from 26% for the same quarter last year.
Operating expenses increased 4% in the first quarter of fiscal 2016 compared to the same quarter a year ago primarily due to increased headcount and related salaries. Selling and marketing expenses stayed at 7% of total revenue in the current year first quarter, totaling $21.8 million, compared to $21.7 million in the prior year first quarter. Research and development expenses increased 10% to $18.6 million, or 6% of total revenue, from $16.8 million, or 6% of total revenue, for the first quarter in fiscal 2015. General and administrative costs increased 4% in the current year first quarter to $17.1 million, or 5% of total revenue, from $16.5 million, or 5% of total revenue, in the first quarter of fiscal 2015.
Operating income increased 12% to $80.5 million, or 25% of first quarter revenue, compared to $71.6 million, or 24% of revenue in the first quarter of fiscal 2015. Provision for income taxes increased 15% in the current first quarter compared to the same quarter in fiscal 2015 and is 36.1% of income before income taxes this quarter compared to 35.5% of income before income taxes for the same period in fiscal 2015. First quarter net income totaled $51.4 million, or $0.64 per diluted share, compared to $46.1 million, or $0.56 per diluted share in the first quarter of fiscal 2015, for an increase of 11%.
For the first quarter of fiscal 2016, the bank systems and services segment revenue increased 2% to $236.7 million with a gross margin of 40% from $231.4 million with a gross margin of 41% in the same quarter last year.  The credit union systems and services segment revenue increased 21% to $84.9 million with a gross margin of 50% for the first quarter of 2015 from $70.1 million and a gross margin of 45% in the same period a year ago.
Balance Sheet and Cash Flow Review
At September 30, 2015, cash and cash equivalents increased to $84.5 million from $39.4 million at September 30, 2014. Trade receivables decreased to $147.7 million from $159.1 million a year ago. Current and long term debt decreased from $11.0 million a year ago to $1.1 million at September 30, 2015. Deferred revenue increased to $493.4 million at September 30, 2015, compared to $458.8 million a year ago. Stockholders' equity increased 2% to $954.3 million at September 30, 2015, compared to $934.5 million a year ago.
Cash provided by operations totaled $126.7 million in the current fiscal year compared to $93.1 million for the same period last year. The following table summarizes net cash (in thousands) from operating activities:

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JKHY First Quarter Fiscal 2016 Net Income Increases 11%
November 4, 2015

 
Three Months Ended September 30,
 
2015
 
2014
Net income
$
51,366

 
$
46,088

Non-cash expenses
34,874

 
24,977

Change in receivables
97,926

 
64,931

Change in deferred revenue
(39,702
)
 
(34,072
)
Change in other assets and liabilities
(17,768
)
 
(8,776
)
Net cash provided by operating activities
$
126,696

 
$
93,148


Cash used in investing activities for the first three months of fiscal 2016 totaled $48.6 million and included capital expenditures on facilities and equipment of $12.9 million, which was mainly for the purchase of computer equipment, $23.0 million for the development of software, $8.3 million for the acquisition of Bayside Business Solutions, and $4.4 million for the purchase and development of internal use software. Cash used in investing activities for the first three months of fiscal 2015 totaled $42.9 million and included capital expenditures on facilities and equipment of $21.5 million, which mainly included the purchase of aircraft and computer equipment. Other uses of cash included $18.0 million for the development of software and $3.5 million for the purchase and development of internal use software.

Financing activities used cash of $142.0 million for the first three months of fiscal 2016. Cash used was mainly $69.2 million for the purchase of treasury shares, repayment of the revolving credit facility and capital leases of $51.6 million, dividends paid to stockholders of $20.2 million, and $0.9 million net cash outflow from the issuance of stock and tax related to stock-based compensation. Financing activities used cash in the first three months of fiscal 2015 of $81.2 million. Cash used was mainly $60.5 million for the purchase of treasury shares and dividends paid to stockholders of $18.0 million, and $2.5 million net cash outflow from the issuance of stock and tax related to stock-based compensation.

According to Kevin Williams, CFO, “As we have discussed in the past, we continue to invest in both existing and new products. The vast majority of our capitalized software is in the areas of electronic payments, mobile offerings and other new products and offerings that will drive additional future revenue; with the minority being spent on our existing core offerings. We continue to have a strong cash balance along with our entire revolver facility available for potential acquisitions, stock buy-backs, dividends, and general investment in the company.”


About Jack Henry & Associates
Jack Henry & Associates, Inc. (NASDAQ: JKHY) is a leading provider of computer systems and electronic payment solutions primarily for financial services organizations. Its technology solutions serve almost 10,900 customers nationwide, and are marketed and supported through three primary brands. Jack Henry Banking™ supports banks ranging from community to mid-tier institutions with information processing solutions. Symitar™ is the leading provider of information processing solutions for credit unions of all sizes. ProfitStars provides highly specialized products and services that enable financial institutions of every asset size and charter, and diverse corporate entities to mitigate and control risks, optimize revenue and growth opportunities, and contain costs.  Additional information is available at www.jackhenry.com. The company will hold a conference call on November 5, 2015; at 7:45 a.m. Central Time and investors are invited to listen at www.jackhenry.com.
Statements made in this news release that are not historical facts are forward-looking information. Actual results may differ materially from those projected in any forward-looking information. Specifically, there are a number of important factors that could cause actual results to differ materially from those anticipated by any forward-looking information. Additional information on these and other factors, which could affect the Company's financial results, are included in its Securities and Exchange Commission (SEC) filings on Form 10-K, and potential investors should review these statements. Finally, there may be other factors not mentioned above or included in the Company's SEC filings that may cause actual results to differ materially from any forward-looking information.


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JKHY First Quarter Fiscal 2016 Net Income Increases 11%
November 4, 2015

Condensed Consolidated Statements of Income (Unaudited)
 
 
 
 
 
(In Thousands, Except Per Share Data)
Three Months Ended September 30,
 
% Change
 
2015
 
2014
 
 
REVENUE
 
 
 
 
 
License
$
1,604

 
$
503

 
219
 %
Support and service
307,746

 
288,216

 
7
 %
Hardware
12,268

 
12,755

 
(4
)%
Total
321,618

 
301,474

 
7
 %
COST OF SALES
 
 
 
 
 
Cost of license
181

 
409

 
(56
)%
Cost of support and service
174,714

 
165,090

 
6
 %
Cost of hardware
8,768

 
9,385

 
(7
)%
Total
183,663

 
174,884

 
5
 %
GROSS PROFIT
137,955

 
126,590

 
9
 %
Gross Profit Margin
43
%
 
42
%
 
 
OPERATING EXPENSES
 
 
 
 
 
Selling and marketing
21,751

 
21,663

 
—
 %
Research and development
18,554

 
16,791

 
10
 %
General and administrative
17,113

 
16,510

 
4
 %
Total
57,418

 
54,964

 
4
 %
OPERATING INCOME
80,537

 
71,626

 
12
 %
INTEREST INCOME (EXPENSE)
 
 
 
 
 
Interest income
113

 
57

 
98
 %
Interest expense
(220
)
 
(266
)
 
(17
)%
Total
(107
)
 
(209
)
 
(49
)%
INCOME BEFORE INCOME TAXES
80,430

 
71,417

 
13
 %
PROVISION FOR INCOME TAXES
29,064

 
25,329

 
15
 %
NET INCOME
$
51,366

 
$
46,088

 
11
 %
Diluted net income per share
$
0.64

 
$
0.56

 
 
Diluted weighted average shares outstanding
80,735

 
82,589

 
 
 
 
 
 
 
 
Consolidated Balance Sheet Highlights (Unaudited)
 
 
 
 
 
(In Thousands)
September 30,
 
% Change
 
2015
 
2014
 
 
Cash and cash equivalents
$
84,485

 
$
39,403

 
114
 %
Receivables
147,652

 
159,110

 
(7
)%
Total assets
1,714,197

 
1,620,796

 
6
 %
 
 
 
 
 
 
Accounts payable and accrued expenses
$
75,274

 
$
66,354

 
13
 %
Current and long term debt
1,107

 
11,005

 
(90
)%
Deferred revenue
493,354

 
458,795

 
8
 %
Stockholders' Equity
954,284

 
934,471

 
2
 %


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