EX-99.1 2 d33080dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Tyler Technologies Reports Earnings For Third Quarter 2015

Quarterly revenue, earnings and backlog reach record levels

PLANO, Texas – Oct. 21, 2015 – Tyler Technologies, Inc. (NYSE: TYL) today announced financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Financial Highlights:

 

    Total revenue was $150.8 million, up 17.2 percent from $128.7 million for the third quarter of 2014. Organic growth was 15.7 percent.

 

    Recurring revenue from maintenance and subscriptions was $90.1 million, an increase of 16.3 percent compared to the third quarter of 2014, and comprised 59.7 percent of third quarter 2015 revenue.

 

    Royalty revenue from Microsoft Dynamics® AX, which is included in software licenses and royalties, was $1.0 million, up 12.1 percent compared to $906,000 for the third quarter of 2014.

 

    Operating income was $31.5 million, an increase of 17.7 percent from $26.7 million for the third quarter of 2014.

 

    Net income was $20.1 million, or $0.55 per diluted share, up 18.5 percent compared to $17.0 million, or $0.48 per diluted share, for the third quarter of 2014.

 

    Cash flow from operations was $55.1 million, down 16.9 percent compared to $66.3 million for the third quarter of 2014.

 

    Non-GAAP operating income was $39.3 million, up 21.5 percent from $32.4 million for the third quarter of 2014.

 

    Adjusted EBITDA was $41.8 million, up 21.8 percent compared to $34.3 million for the third quarter of 2014.

 

    Non-GAAP net income was $25.6 million, or $0.71 per diluted share, up 22.4 percent compared to $21.0 million, or $0.59 per diluted share, for the third quarter of 2014.

 

    Total backlog was $757.7 million, up 12.4 percent from $674.0 million at September 30, 2014. Software-related backlog (excluding appraisal services) was $707.7 million, an increase of 11.6 percent compared to $634.3 million at September 30, 2014.

 

    On September 30, 2015, Tyler signed a definitive agreement to acquire privately held New World Systems Corporation for $670 million in cash and stock. The Troy, Michigan-based company has more than 2,000 public sector customers and more than 470 employees. Under the terms of the agreement, Tyler will acquire all of the equity in New World Systems for $360 million in cash and approximately 2.1 million shares of Tyler’s common stock. The transaction is expected to close in the fourth quarter of 2015 and is subject to regulatory approval and customary closing conditions.

“Tyler’s third quarter results once again exceeded our expectations, with double-digit growth across all revenue lines,” said John S. Marr Jr., Tyler’s president and chief executive officer. “Quarterly revenue surpassed $150 million for the first time, led by growth in subscription revenues of almost 28 percent. Despite some gross margin headwind from expenses associated with onboarding new professional services and development staff in recent quarters to support our growing backlog, we expanded our non-GAAP operating margin by 100 basis points to 26.1 percent.

 

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Tyler Technologies Reports Earnings For Third Quarter 2015

Oct. 21, 2015

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“Bookings this quarter increased nearly 26 percent from third quarter of 2014, and bookings for new SaaS contracts were the highest in Tyler’s history. As a result, our backlog reached a new high of $758 million as of September 30.

“We enter the fourth quarter with a great deal of momentum and look forward to building on that with the acquisition of New World Systems. We believe that this acquisition will be beneficial to the clients, employees and shareholders of both companies. We are excited about this opportunity to continue to execute our strategy of being an industry leader in all major enterprise applications essential to local government.”

Guidance for 2015

As of October 21, 2015, Tyler Technologies is providing the following guidance for the full year 2015:

 

    Total revenues are expected to be in the range of $578 million to $583 million.

 

    Diluted earnings per share are expected to be approximately $2.01 to $2.07.

 

    Non-GAAP diluted earnings per share are expected to be approximately $2.56 to $2.62.

 

    Pretax non-cash, share-based compensation expense is expected to be approximately $20.3 million to $20.8 million.

 

    The effective tax rate is expected to be in the range of 36.5 percent to 37.5 percent.

 

    Capital expenditures are expected to be between $14.0 million and $15.0 million, and total depreciation and amortization expense is expected to be between $15.5 million and $16.0 million, including approximately $7.0 million of amortization of acquisition intangibles.

Note that our guidance does not include any impact from the proposed acquisition of New World Systems, as the completion and timing of the acquisition is subject to regulatory approval and other customary closing conditions.

Conference Call

Tyler Technologies will hold a conference call on Thursday, October 22, at 10:00 a.m. EDT to discuss the company’s results. The company is offering participants the opportunity to register in advance for the conference through the following link: http://dpregister.com/10072798. Registered participants will receive an email with a calendar reminder and a dial-in number and PIN that will allow them immediate access to the call on October 22, 2015.

Participants who do not wish to pre-register for the call may dial in using 866-777-2509 (U.S. callers) or 412-317-5413 (international callers), and ask for the “Tyler Technologies” call. A replay will be available two hours after completion of the call through October 28, 2015. To access the replay, please dial 877-344-7529 (U.S. callers), 412-317-0088 (international callers) and 855-669-9658 (Canada callers) and reference passcode 10072798.

The live webcast and archived replay can also be accessed at www.tylertech.com/investors.

 

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Tyler Technologies Reports Earnings For Third Quarter 2015

Oct. 21, 2015

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About Tyler Technologies, Inc.

Tyler Technologies (NYSE: TYL) is a leading provider of end-to-end information management solutions and services for local governments. Tyler partners with clients to empower the public sector — cities, counties, schools and other government entities — to become more efficient, more accessible and more responsive to the needs of citizens. Tyler’s client base includes more than 13,000 local government offices in all 50 states, Canada, the Caribbean, the United Kingdom and other international locations. Forbes named Tyler one of “America’s Best Small Companies” eight times and the company has been included six times on the Barron’s 400 Index, a measure of the most promising companies in America. More information about Plano-based Tyler Technologies can be found at www.tylertech.com.

Non-GAAP Financial Measures

Tyler Technologies has provided in this press release financial measures that have not been prepared in accordance with generally accepted accounting principles (GAAP) and are therefore considered non-GAAP financial measures. This information includes non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share, EBITDA and adjusted EBITDA. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating Tyler’s ongoing operational performance. Tyler believes the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures discussed above exclude share-based compensation expense, employer portion of payroll taxes on employee stock transactions, acquisition-related costs, and expenses associated with amortization of intangibles arising from business combinations. We use these measures and believe they are useful to investors because they provide additional insight in comparing results from period to period.

Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial information prepared in accordance with GAAP. The non-GAAP measures used by Tyler Technologies may be different from non-GAAP measures used by other companies. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which has been provided in the financial statement tables included below in this press release.

Forward-looking Statements

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” “plans,” “intends,” “continues,” “may,” “will,” “should,” “projects,” “might,” “could” or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our clients, primarily local and state governments, that could negatively impact information technology

 

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Tyler Technologies Reports Earnings For Third Quarter 2015

Oct. 21, 2015

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spending; (2) our ability to protect client information from security breaches and provide uninterrupted operations of data centers; (3) material portions of our business require the Internet infrastructure to be adequately maintained; (4) our ability to achieve our financial forecasts due to various factors, including project delays by our clients, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements; (5) general economic, political and market conditions; (6) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (7) our ability to achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations; (8) competition in the industry in which we conduct business and the impact of competition on pricing, client retention and pressure for new products or services; (9) the ability to attract and retain qualified personnel and dealing with the loss or retirement of key members of management or other key personnel; and (10) costs of compliance and any failure to comply with government and stock exchange regulations. A detailed discussion of these factors and other risks that affect our business are described in our filings with the Securities and Exchange Commission, including the detailed “Risk Factors” contained in our most recent annual report on Form 10-K. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.

###

(Comparative results follow)

Contact: Brian K. Miller

Executive Vice President - CFO

Tyler Technologies, Inc.

972-713-3720

brian.miller@tylertech.com

15-73

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2015      2014     2015      2014  

Revenues:

          

Software licenses and royalties

   $ 15,690       $ 13,226      $ 44,576       $ 36,541   

Subscriptions

     29,036         22,694        81,273         64,135   

Software services

     36,398         31,159        101,765         85,594   

Maintenance

     61,018         54,713        177,829         156,904   

Appraisal services

     6,557         5,802        19,337         16,097   

Hardware and other

     2,146         1,070        7,326         6,390   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenues

     150,845         128,664        432,106         365,661   

Cost of revenues:

          

Software licenses and royalties

     147         565        1,183         1,439   

Acquired software

     552         448        1,464         1,373   

Software services, maintenance and subscriptions

     72,764         61,428        207,819         174,701   

Appraisal services

     3,984         3,764        12,397         10,740   

Hardware and other

     1,565         667        5,278         4,528   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total cost of revenues

     79,012         66,872        228,141         192,781   

Gross profit

     71,833         61,792        203,965         172,880   

Selling, general and administrative expenses

     31,869         27,344        90,810         80,130   

Research and development expense

     7,193         6,567        21,307         19,128   

Amortization of customer and trade name intangibles

     1,282         1,136        3,585         3,393   
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income

     31,489         26,745        88,263         70,229   

Other income (expense), net

     255         (47     621         (522
  

 

 

    

 

 

   

 

 

    

 

 

 

Income before income taxes

     31,744         26,698        88,884         69,707   

Income tax provision

     11,602         9,698        32,633         26,084   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 20,142       $ 17,000      $ 56,251       $ 43,623   
  

 

 

    

 

 

   

 

 

    

 

 

 

Earnings per common share:

          

Basic

   $ 0.59       $ 0.52      $ 1.66       $ 1.32   
  

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

   $ 0.55       $ 0.48      $ 1.56       $ 1.23   
  

 

 

    

 

 

   

 

 

    

 

 

 

Weighted average common shares outstanding:

          

Basic

     33,900         32,935        33,787         32,947   

Diluted

     36,349         35,284        36,163         35,339   


TYLER TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2015     2014     2015     2014  

Reconciliation of non-GAAP gross profit and margin

        

GAAP gross profit

   $ 71,833      $ 61,792      $ 203,965      $ 172,880   

Non-GAAP adjustments:

        

Add: Share-based compensation expense included in cost of revenues

     902        569        2,349        1,595   

Add: Amortization of acquired software

     552        448        1,464        1,373   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 73,287      $ 62,809      $ 207,778      $ 175,848   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     48.6     48.8     48.1     48.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of non-GAAP operating income and margin

        

GAAP operating income

   $ 31,489      $ 26,745      $ 88,263      $ 70,229   

Non-GAAP adjustments:

        

Add: Share-based compensation expense

     5,598        3,885        14,459        10,887   

Add: Employer portion of payroll tax related to employee stock transactions

     60        144        333        168   

Add: Acquisition-related costs

     342        —          342        —     

Add: Amortization of acquired software

     552        448        1,464        1,373   

Add: Amortization of customer and trade name intangibles

     1,282        1,136        3,585        3,393   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjustments subtotal

   $ 7,834      $ 5,613      $ 20,183      $ 15,821   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 39,323      $ 32,358      $ 108,446      $ 86,050   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     26.1     25.1     25.1     23.5
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of non-GAAP net income and earnings per share

  

     

GAAP net income

   $ 20,142      $ 17,000      $ 56,251      $ 43,623   

Non-GAAP adjustments:

        

Add: Total non-GAAP adjustments to operating income

     7,834        5,613        20,183        15,821   

Less: Tax impact related to non-GAAP adjustments

     (2,334     (1,661     (6,147     (4,686
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 25,642      $ 20,952      $ 70,287      $ 54,758   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per diluted share

   $ 0.71      $ 0.59      $ 1.94      $ 1.55   
  

 

 

   

 

 

   

 

 

   

 

 

 

Detail of share-based compensation expense

        

Cost of software services, maintenance and subscriptions

   $ 902      $ 569      $ 2,349      $ 1,595   

Selling, general and administrative expenses

     4,696        3,316        12,110        9,292   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total share-based compensation expense

   $ 5,598      $ 3,885      $ 14,459      $ 10,887   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of adjusted EBITDA

        

GAAP net income

   $ 20,142      $ 17,000      $ 56,251      $ 43,623   

Amortization of customer and trade name intangibles

     1,282        1,136        3,585        3,393   

Depreciation and other amortization included in cost of revenues, SG&A and other expenses

     2,820        2,519        8,001        7,543   

Interest expense included in other expense, net

     —          75        —          362   

Income tax provision

     11,602        9,698        32,633        26,084   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 35,846      $ 30,428      $ 100,470      $ 81,005   

Share-based compensation expense

     5,598        3,885        14,459        10,887   

Acquisition-related costs

     342        —          342        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 41,786      $ 34,313      $ 115,271      $ 91,892   
  

 

 

   

 

 

   

 

 

   

 

 

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

     September 30,      December 31,  
     2015      2014  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 238,614       $ 206,167   

Accounts receivable, net

     129,228         112,660   

Current investments and other current assets

     33,989         18,209   

Deferred income taxes

     9,674         9,674   
  

 

 

    

 

 

 

Total current assets

     411,505         346,710   

Accounts receivable, long-term portion

     1,072         1,761   

Property and equipment, net

     68,092         65,910   

Other assets:

     

Goodwill and other intangibles, net

     161,633         158,864   

Cost method investment

     15,000         —     

Non-current investments and other assets

     21,080         737   
  

 

 

    

 

 

 

Total assets

   $ 678,382       $ 573,982   
  

 

 

    

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable and accrued liabilities

   $ 41,584       $ 43,627   

Deferred revenue

     200,890         189,212   
  

 

 

    

 

 

 

Total current liabilities

     242,474         232,839   

Deferred income taxes

     4,813         4,170   

Shareholders’ equity

     431,095         336,973   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 678,382       $ 573,982   
  

 

 

    

 

 

 


TYLER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2015     2014     2015     2014  

Cash flows from operating activities:

        

Net income

   $ 20,142      $ 17,000      $ 56,251      $ 43,623   

Adjustments to reconcile net income to cash provided by operations:

        

Depreciation and amortization

     4,102        3,655        11,586        10,936   

Share-based compensation expense

     5,598        3,885        14,459        10,887   

Excess tax benefit from exercise of share-based arrangements

     (1,974     (3,511     (10,801     (6,717

Changes in operating assets and liabilities, exclusive of effects of acquired companies

     27,232        45,274        (1,582     36,402   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     55,100        66,303        69,913        95,131   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchase of cost method investment

     —          —          (15,000     —     

Purchase of held-to-maturity securities

     (22,942     —          (29,391     —     

Proceeds from sale of investments

     —          800        —          808   

Cost of acquisitions, net of cash acquired

     —          (3,242     (6,447     (3,242

Additions to property and equipment

     (2,399     (1,560     (8,525     (8,037

Decrease (increase) in other

     14        (116     5        219   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used by investing activities

     (25,327     (4,118     (59,358     (10,252
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Purchase of treasury shares

     —          (2     (645     (22,817

Proceeds from exercise of stock options

     1,640        2,622        8,369        6,739   

Contributions from employee stock purchase plan

     1,124        1,023        3,367        3,037   

Excess tax benefit from exercise of share-based arrangements

     1,974        3,511        10,801        6,717   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided (used) by financing activities

     4,738        7,154        21,892        (6,324
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in cash and cash equivalents

     34,511        69,339        32,447        78,555   

Cash and cash equivalents at beginning of period

     204,103        88,092        206,167        78,876   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 238,614      $ 157,431      $ 238,614      $ 157,431