EX-99.1 2 d48447exv99w1.htm NEWS RELEASE exv99w1
 

Exhibit 99.1
(TYLER TECHNOLOGIES LOGO)
Contact: Brian K. Miller
Senior Vice President & CFO
Tyler Technologies, Inc.
(972) 713-3720
brian.miller@tylertech.com
TYLER TECHNOLOGIES REPORTS EARNINGS FOR
SECOND QUARTER 2007
REVENUES RISE 10 PERCENT
Dallas, July 25, 2007 — Tyler Technologies, Inc. (NYSE: TYL) today reported the following financial results for the quarter ended June 30, 2007:
  •   Total revenues were $54.1 million, up 10.1 percent compared to $49.2 million in the same period last year. Software-related revenues (software licenses, software services and maintenance) grew in the aggregate 9.3 percent for the quarter.
 
  •   Operating income was $5.8 million, compared with operating income of $5.6 million in the same quarter of 2006.
 
  •   The effective income tax rate was 39.1 percent, compared to 35.5 percent in the second quarter of 2006.
 
  •   Net income was $3.8 million, or $0.09 per diluted share for both the three months ended June 30, 2007 and 2006.
 
  •   Free cash flow was $972,000 (cash provided by operating activities of $1.9 million minus capital expenditures of $937,000). For the second quarter of 2006, free cash flow was negative $780,000 (cash provided by operating activities of $625,000 minus capital expenditures of $1.4 million). For the six months ended June 30, 2007, free cash flow was $7.1 million (cash provided by operating activities of $8.8 million minus capital expenditures of $1.7 million). For the six months ended June 30, 2006, free cash flow was $8.2 million (cash provided by operating activities of $10.6 million minus capital expenditures of $2.4 million).
 
  •   EBITDA, or earnings before interest, income taxes, depreciation and amortization, totaled $8.4 million. EBITDA for the second quarter of 2006 totaled $8.0 million.
 
  •   Gross margin was 37.6 percent, compared to 38.5 percent in the quarter ended June 30, 2006. Sequentially, gross margin for the second quarter improved from 35.8 percent in the first quarter of 2007.
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Tyler Technologies Reports Earnings for
Second Quarter 2007
July 25, 2007
Page 2
  •   Selling, general and administrative expenses were $12.8 million (23.6 percent of revenues), compared to $12.2 million (24.8 percent of revenues) in the same quarter last year. Sequentially, SG&A expenses as a percentage of revenue decreased from 25.8 percent for the first quarter of 2007.
 
  •   Share-based compensation expense for the second quarter, related to share-based awards under SFAS No. 123R, totaled $575,000, of which $56,000 was included in cost of revenues and $519,000 was included in selling, general and administrative expenses. For the second quarter of 2006, share-based compensation expense was $504,000, of which $42,000 was included in cost of revenues and $462,000 was included in selling, general and administrative expenses.
 
  •   Total backlog was $203.9 million at June 30, 2007, compared to $197.8 million at March 31, 2007 and $195.5 million at June 30, 2006. Software-related backlog (excluding appraisal services) grew from the first quarter of 2007 by $10.7 million to $186 million at June 30, 2007.
 
  •   Tyler has no debt and ended the second quarter of 2007 with $34.7 million in cash, cash equivalents and short-term investments.
Revenues for the six months ended June 30, 2007 increased 11.1 percent to $104.4 million from $94.0 million in 2006. Operating income for the first half of 2007 was $9.3 million, compared to $8.9 million in the first half of 2006. Net income for the six months ended June 30, 2007 was $6.2 million, or $0.15 per diluted share, compared to net income of $5.8 million, or $0.14 per share, for the comparable period of 2006.
“Tyler’s results for the second quarter of 2007 were in line with our expectations, with generally solid overall financial performance,” said John S. Marr, Jr., Tyler’s President and Chief Executive Officer. “Total revenues increased more than 10 percent from the second quarter of 2006 and compare favorably to the first quarter of this year. While license revenues, particularly for financial solutions, were somewhat light this quarter, resulting in a slightly lower blended gross margin, our backlog at June 30 reached $203.9 million and the pipeline of new business for the second half of the year appears to be strengthening. Our software services revenues grew by almost 18 percent from the same period last year, and our recurring maintenance revenues increased 15 percent. The appraisal services business generated strong results with 18 percent growth and continues to exceed expectations.
“We are pleased that, with flat earnings, we generated approximately 5 percent growth in EBITDA from the same period last year, even though we increased our research and development expenses by 73 percent and continued to increase staffing as we add capacity to deliver our backlog, particularly for our Odyssey courts and justice solutions,” commented Mr. Marr. “In addition, SG&A expenses as a percentage of revenue declined from the same period in 2006 and from the first quarter of this year, as we emphasize control over expenses and leverage our overhead as we grow revenues.
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Tyler Technologies Reports Earnings for
Second Quarter 2007
July 25, 2007
Page 3
“Free cash flow for the second quarter improved by $1.8 million over the same period last year, and our cash and investments balance remained strong at approximately $35 million heading into the third quarter, which is historically our highest cash-generating quarter,” continued Mr. Marr. “We were very active with our stock repurchase program in the second quarter, using $7.2 million to repurchase approximately 599,500 shares of our common stock. Year-to-date, we have repurchased 889,000 shares for a total of $11.1 million.
“Our second quarter results, together with our backlog of signed contracts and our view of the new business pipeline, reinforce our confidence in the guidance we provided in April of this year, and our current outlook for the full year 2007 remains consistent with that guidance,” Mr. Marr concluded.
Annual Guidance for 2007:
Total revenues for 2007 are currently expected to be in the range of $218 million to $222 million. Tyler expects to have diluted earnings per share of approximately $0.37 to $0.42 for the full year 2007. These estimates include assumed pretax expense for the year of approximately $2.5 million, or $0.05 per share after taxes, related to stock options and the Company’s stock purchase plan. The Company currently estimates that its effective income tax rate for 2007 will be approximately 39 percent.
Tyler expects that free cash flow for the year 2007 will be between $24 million and $28 million (cash provided by operations of $28 million to $31 million minus capital expenditures of between $3.5 million and $4.0 million).
Tyler Technologies will hold a conference call on Thursday, July 26 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: (866) 293-8969 for U.S. dialers and (913) 312-6682 for international dialers. Please refer to confirmation code 7401267. A replay of the call will be available two hours after the completion of the call through August 1, 2007. To access the replay, please dial (888) 203-1112 for U.S. dialers and (719) 457-0820 for international dialers and reference pass code 7401267. A live Webcast of the call can be accessed on the Company’s Web site at www.tylertech.com. A replay will also be available on Tyler’s Web site following the conference call.
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 more than 6,000 local government offices throughout all 50 states, Canada, Puerto Rico and the United Kingdom. In April 2007, Tyler was named one of “America’s 100 Most Trustworthy Companies” by Audit Integrity, an independent research firm. More information about Tyler Technologies can be found at www.tylertech.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,
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Tyler Technologies Reports Earnings for
Second Quarter 2007
July 25, 2007
Page 4
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.
####
(Comparative results follow)
07-31

 

 

TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Amounts in thousands, except per share data)
(Unaudited)
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2007     2006     2007     2006  
Revenues:
                                
Software licenses
   $ 8,393     $ 9,824     $ 16,364     $ 17,395  
Software services
     17,728       15,061       32,792       28,181  
Maintenance
     20,455       17,716       40,394       35,373  
Appraisal services
     6,007       5,108       11,587       9,807  
Hardware and other
     1,529       1,442       3,307       3,253  
 
                        
Total revenues
     54,112       49,151       104,444       94,009  
 
                                
Cost of revenues:
                                
Software licenses
     1,975       2,416       3,935       5,092  
Acquired software
     427       353       821       654  
Software services and maintenance
     26,180       22,949       50,768       44,694  
Appraisal services
     4,096       3,454       8,092       6,860  
Hardware and other
     1,097       1,033       2,469       2,301  
 
                        
Total cost of revenues
     33,775       30,205       66,085       59,601  
 
                                
Gross profit
     20,337       18,946       38,359       34,408  
 
                                
Selling, general and administrative expenses
     12,781       12,181       25,757       23,157  
Research and development expense
     1,404       812       2,627       1,714  
Amortization of customer and trade name intangibles
     356       325       703       647  
 
                        
Operating income
     5,796       5,628       9,272       8,890  
Other income, net
     364       200       811       297  
 
                        
Income before income taxes
     6,160       5,828       10,083       9,187  
Income tax provision
     2,410       2,068       3,932       3,415  
 
                        
Net income
   $ 3,750     $ 3,760     $ 6,151     $ 5,772  
 
                        
 
                                
Earnings per common share:
                                
Basic
   $ 0.10     $ 0.10     $ 0.16     $ 0.15  
 
                        
Diluted
   $ 0.09     $ 0.09     $ 0.15     $ 0.14  
 
                        
 
                                
EBITDA (1)
   $ 8,390     $ 7,997     $ 14,455     $ 13,746  
 
                        
 
                                
Weighted average common shares outstanding:
                                
Basic
     38,540       39,026       38,571       39,070  
Diluted
     41,448       41,946       41,651       41,920  
 
(1)   Reconciliation of EBITDA
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2007     2006     2007     2006  
Net income
   $ 3,750     $ 3,760     $ 6,151     $ 5,772  
Amortization of customer and trade name intangibles
     356       325       703       647  
Depreciation and other amortization included in cost of revenues and selling, general and administrative expenses
     2,249       2,150       4,451       4,474  
Interest income included in other income, net
     (375 )     (306 )     (782 )     (562 )
Income tax provision
     2,410       2,068       3,932       3,415  
 
                        
EBITDA
   $ 8,390     $ 7,997     $ 14,455     $ 13,746  
 
                        

 

 

TYLER TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
                 
    June 30        
    2007     December 31,  
    (unaudited)     2006  
ASSETS
                
 
                
Current assets:
                
Cash and cash equivalents
   $ 8,925     $ 17,212  
Restricted cash equivalents
     4,462       4,962  
Short-term investments available-for-sale
     21,326       19,543  
Accounts receivable, net
     61,611       58,188  
Other current assets
     8,454       9,190  
Deferred income taxes
     2,579       2,579  
 
            
Total current assets
     107,357       111,674  
 
                
Accounts receivable, long-term portion
     1,121       1,675  
Property and equipment, net
     8,747       7,390  
 
                
Other assets:
                
Goodwill and other intangibles, net
     100,386       99,371  
Other
     149       166  
 
            
 
                
Total assets
   $ 217,760     $ 220,276  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 20,216     $ 22,798  
Deferred revenue
     64,872       62,387  
 
            
Total current liabilities
     85,088       85,185  
 
                
Deferred income taxes
     8,492       9,216  
Shareholders’ equity
     124,180       125,875  
 
            
 
                
Total liabilities and shareholders’ equity
   $ 217,760     $ 220,276