EX-99.1 2 d33589exv99w1.htm NEWS RELEASE exv99w1
 

Exhibit 99.1
     (TYLER LOGO)
Contact: Brian K. Miller
Senior Vice President & CFO
Tyler Technologies, Inc.
(972) 713-3720
bmiller@tylerworks.com
TYLER TECHNOLOGIES REPORTS INCREASE IN
FOURTH QUARTER 2005 EARNINGS
Dallas, March 1, 2006 — Tyler Technologies, Inc. (NYSE: TYL) today reported the following financial results for the quarter ended December 31, 2005:
  •   Total revenues for the quarter ended December 31, 2005 were $44.3 million, down one percent compared to $44.7 million in the same period last year. Software-related revenues (software licenses, software services and maintenance) grew in the aggregate 3 percent for the quarter.
 
  •   Operating income for the quarter ended December 31, 2005 was $4.8 million, a 10 percent decrease compared with operating income of $5.3 million in the same quarter of 2004.
 
  •   Net income for the three months ended December 31, 2005 was $3.1 million, or $0.07 per diluted share. Net income for the three months ended December 31, 2004 amounted to $3.0 million, or $0.07 per share.
 
  •   EBITDA, or earnings before interest, income taxes, depreciation and amortization, totaled $7.5 million in the fourth quarter of 2005. EBITDA for the fourth quarter of 2004 totaled $8.0 million.
 
  •   Gross margin for the quarter ended December 31, 2005 was 37.7 percent, compared to 39.9 percent in the quarter ended December 31, 2004.
 
  •   Selling, general and administrative (SG&A) expenses in the fourth quarter were $11.6 million (26.2 percent of revenues), compared to $12.2 million (27.3 percent of revenues) in the same quarter last year.
 
  •   Free cash flow for the fourth quarter of 2005 was $3.9 million (cash provided by operating activities of $4.5 million minus capital expenditures of $589,000). For the fourth quarter of 2004, free cash flow was $1.8 million (cash provided by operating activities of $3.6 million minus capital expenditures of $1.8 million).
 
  •   Total backlog was $165.4 million at December 31, 2005, compared to $142.2 million at December 31, 2004. Software-related backlog (excluding appraisal services) grew year-over-year by $28.6 million, or 26 percent, to $136.9 million at December 31, 2005.
 
  •   Tyler has no debt and ended the fourth quarter of 2005 with $37.5 million in cash, short-term investments, and certificates of deposit. The Company repurchased 276,000 shares of its common stock during the quarter at an aggregate cost of $2.3 million.
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Tyler Technologies Reports Increase in Fourth Quarter 2005 Earnings
March 1, 2006
Page 2
Revenues for the year ended December 31, 2005 decreased one percent to $170.5 million from $172.3 million in 2004. Operating income for the year 2005 was $12.7 million, compared to $17.1 million in 2004. Net income for the year ended December 31, 2005 was $8.2 million, or $0.19 per diluted share, compared to net income of $10.1 million, or $0.23 per share, for the comparable period of 2004.
Results for the year ended December 31, 2005 include a pretax restructuring charge of $1.3 million recorded in the second quarter. Excluding the restructuring charge, operating income for the year ended December 31, 2005 would have been $14.0 million, and net income would have been $9.0 million, or $0.21 per share.
For the year ended December 31, 2005, free cash flow was $18.5 million (cash provided by operating activities of $21.2 million minus capital expenditures of $2.7 million), an increase of 21 percent compared to free cash flow of $15.3 million (cash provided by operating activities of $22.1 million minus capital expenditures of $6.8 million) for the same period of 2004. Cash flow for the year 2005 includes $1.3 million in cash expenditures for restructuring costs.
“Tyler’s results remained solid in the fourth quarter — our 19th consecutive profitable quarter — and were at the upper end of our previous guidance range,” said John S. Marr, Jr., Tyler’s President and Chief Executive Officer. “While total revenues were stable, our financial systems products achieved growth of 9 percent for the fourth quarter, which was offset by a decline in appraisal services revenue.
“Appraisal services revenues were off 26 percent compared to last year’s fourth quarter but improved slightly from the third quarter of 2005. The gross margin for appraisal services improved for the third consecutive quarter following our reorganization of that business, to 29 percent in the most recent quarter.”
Mr. Marr continued, “Free cash flow for the fourth quarter of 2005 once again was significantly greater than book earnings. We used $2.3 million of our cash generated from operations to repurchase Tyler stock in the fourth quarter and at year-end had 2.1 million shares available to purchase under our current board authorization.
“We continue to expect that Tyler will experience significant growth during 2006 in both revenues and earnings, and our current outlook remains consistent with the preliminary guidance we issued on January 31. New business signings were very strong in the fourth quarter and we began 2006 with a record high backlog of signed contracts. We are also pleased with the overall trend of improvement in our mix of revenues.”
Total revenues for 2006 are currently expected to be in the range of $191 million to $196 million. Software-related revenues for the full year are expected to grow approximately 13 percent to 17 percent, while appraisal services revenues are expected to decline slightly compared to 2005. The Company expects to have diluted earnings per share of approximately $0.29 to $0.32, with 65% or more of the earnings coming in the second half of the year. These estimates include assumed pretax expense for the year of approximately $1.9 million, or $0.04 per share after taxes, related to stock options and the Company’s stock purchase plan. Tyler’s estimated annual effective income tax rate for 2006 is approximately 40.8 percent.
Tyler also expects that free cash flow for the year 2006 will be between $21 million and $24 million (cash provided by operations of $24 million to $28 million minus capital expenditures of between $3.5 million and $4.0 million).
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Tyler Technologies Reports Increase in Fourth Quarter 2005 Earnings
March 1, 2006
Page 3
Tyler Technologies will hold a conference call on Thursday, March 2 at 12:00 p.m. Eastern time to discuss the Company’s results. To participate in the teleconference, please dial into the call a few minutes before the start time: (800) 932-6407 for U.S. dialers and (706) 679-3884 for international dialers. Please refer to confirmation code 5474468. A replay of the call will be available two hours after the completion of the call through March 9, 2006. To access the replay, please dial (800) 642-1687 for U.S. dialers and (706) 645-9291 for international dialers. A live webcast and archived replay of the call can be accessed on the Company’s Web site at www.tylerworks.com.
Based in Dallas, Tyler Technologies is a leading provider of end-to-end information management solutions and services for local governments. Tyler partners with clients to make local government more accessible to the public, more responsive to needs of citizens, and more efficient. Tyler’s client base includes nearly 6,000 local government offices throughout all 50 states, Canada, Puerto Rico and the United Kingdom. Forbes Magazine named Tyler one of the “200 Best Small Companies” in America in 2004. More information about Tyler Technologies can be found at www.tylerworks.com.
Non-GAAP Measures:
This press release discloses the financial measures of EBITDA and free cash flow. These financial measures are not prepared in accordance with generally accepted accounting principles (GAAP) and are therefore considered non-GAAP financial measures. The non-GAAP measures should be considered in addition to, and not as a substitute for, or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. The non-GAAP measures used by Tyler Technologies may be different from non-GAAP measures used by other companies. We believe the presentation of these non-GAAP financial measures provides useful information to users of our financial statements and is helpful to fully understand our past financial performance and prospects for the future. We believe these measures are widely used by investors, analysts, and other users of our financial statements to analyze operating performance and to compare our results to those of other companies, and they provide a more complete understanding of our underlying operational results and trends, as well as our marketplace performance and our ability to generate cash. In addition, we internally monitor and review these non-GAAP financial measures on a consolidated basis as some of the primary indicators management uses to evaluate Company performance and for planning and forecasting future periods. Management believes that EBITDA and free cash flow provide meaningful supplemental information to the investor to fully assess the financial performance, trends and future prospects of Tyler’s core operations.
Tyler Technologies, Inc. has included in this press release “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 concerning its business and operations. Tyler Technologies expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its expectations. These expectations and the related statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, changes in competition, changes in general economic conditions, changes in the budgets and regulatory environments of the Company’s customers, risks associated with the development of new products and the enhancement of existing products, the ability to attract and retain qualified personnel, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.
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(Comparative results follow)

 

 

TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Amounts in thousands, except per share data)
                                 
    Three Months Ended December 31,     Year Ended December 31,  
    2005     2004     2005     2004  
Revenues:
                                
Software licenses
   $ 8,190     $ 9,048     $ 29,552     $ 30,258  
Software services
     12,708       12,654       51,532       49,786  
Maintenance
     16,846       14,933       64,728       57,760  
Appraisal services
     4,443       5,989       18,374       27,394  
Hardware and other
     2,120       2,110       6,271       7,072  
 
                        
Total revenues
     44,307       44,734       170,457       172,270  
 
                                
Cost of revenues:
                                
Software licenses
     2,418       2,255       9,101       8,819  
Acquired software
     199       221       794       1,447  
Software services and maintenance
     20,300       18,304       80,347       72,609  
Appraisal services
     3,143       4,473       14,188       20,132  
Hardware and other
     1,547       1,638       4,540       5,425  
 
                        
Total cost of revenues
     27,607       26,891       108,970       108,432  
 
                                
Gross profit
     16,700       17,843       61,487       63,838  
 
                                
Selling, general and administrative expenses
     11,590       12,200       46,242       45,451  
Restructuring charge
    —       —       1,260       —  
Amortization of customer and trade name intangibles
     316       318       1,266       1,267  
 
                        
Operating income
     4,794       5,325       12,719       17,120  
Other income, net
     303       36       906       317  
 
                        
Income before income taxes
     5,097       5,361       13,625       17,437  
Income tax provision
     1,976       2,331       5,432       7,309  
 
                        
Net income
   $ 3,121     $ 3,030     $ 8,193     $ 10,128  
 
                        
 
                                
Earnings per common share:
                                
Basic
   $ 0.08     $ 0.07     $ 0.21     $ 0.25  
 
                        
Diluted
   $ 0.07     $ 0.07     $ 0.19     $ 0.23  
 
                        
 
                                
EBITDA (1)
   $ 7,502     $ 8,029     $ 23,356     $ 28,377  
 
                        
 
                                
Weighted average common shares outstanding:
                                
Basic
     38,829       40,966       39,439       41,288  
Diluted
     41,869       44,056       42,075       44,566  
 
(1)   Reconciliation of EBITDA
                                 
    Three Months Ended December 31,     Year Ended December 31,  
    2005     2004     2005     2004  
Net income
   $ 3,121     $ 3,030     $ 8,193     $ 10,128  
Amortization of customer and trade name intangibles
     316       318       1,266       1,267  
Depreciation and other amortization included in cost of revenues and selling, general and administrative expenses
     2,270       2,481       9,177       10,119  
Interest income included in other income, net
     (181 )     (131 )     (712 )     (446 )
Income tax provision
     1,976       2,331       5,432       7,309  
 
                        
EBITDA
   $ 7,502     $ 8,029     $ 23,356     $ 28,377  
 
                        

 

 

TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
                 
    December 31,     December 31,  
    2005     2004  
ASSETS
                
 
                
Current assets:
                
Cash and cash equivalents
   $ 20,733     $ 12,573  
Short-term investments available-for-sale
     11,750       13,832  
Restricted certificate of deposit
     4,750       —  
Accounts receivable, net
     49,644       44,180  
Other current assets
     7,359       5,042  
Deferred income taxes
     2,128       1,611  
 
            
Total current assets
     96,364       77,238  
 
                
Accounts receivable, long-term portion
     1,547       1,621  
Property and equipment, net
     5,759       6,624  
 
                
Other assets:
                
Restricted certificate of deposit
     250       7,500  
Goodwill and other intangibles, net
     90,312       97,318  
Other
     205       186  
 
            
 
                
Total assets
   $ 194,437     $ 190,487  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current liabilities
   $ 70,950     $ 59,114  
Deferred income taxes
     11,290       12,973  
Shareholders’ equity
     112,197       118,400  
 
            
 
                
Total liabilities and shareholders’ equity
   $ 194,437     $ 190,487