SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Report (Date of Earliest Event Reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
of incorporation or organization)
25501 West Valley Parkway, Suite 300
Olathe, Kansas 66061
(Address of principal executive offices, including zip code)
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 3, 2016, NIC Inc. (the “Company”) issued a press release announcing its 2016 third quarter financial results. A copy of the press release is furnished with this report on Form 8-K as Exhibit 99.1 includes disclosure relating to the special cash dividend and the newly adopted regular cash dividend policy discussed below and is incorporated by reference herein.
ITEM 7.01 REGULATION FD DISCLOSURE
On November 1, 2016, the Board of Directors of the Company declared a special cash dividend of $0.65 per share, payable on December 9, 2016, to stockholders of record on November 16, 2016. The dividend payout will total approximately $43.3 million based on the current number of shares outstanding. Also on November 1, 2016, the Board of Directors of the Company approved a dividend policy, pursuant to which the Board currently plans to make, subject to subsequent declaration, a regular quarterly cash dividend of $0.08 per share, with the first declaration and payment currently expected to be in the first quarter of 2017. The Company’s ability to pay regular quarterly dividends in the future could be affected by future business performance, liquidity, capital needs, alternative investment opportunities and debt covenants associated with its line of credit. A copy of the press release is furnished with this report on Form 8-K as Exhibit 99.1.
On November 3, 2016 at 4:30 p.m. EDT, the Company will host a conference call, which will also be available by webcast, to discuss its third quarter financial results. The call may also include discussion of company developments, and forward-looking and other material information about business and financial matters.
In accordance with General Instruction B.2 of Form 8-K, the information
in Items 2.02 and 7.01 of this Form 8-K and Exhibit 99.1 is being
furnished and shall not be deemed “filed” for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act
of 1933, as amended, or the Exchange Act, except as shall be expressly
set forth in such filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
99.1 - Press release issued by NIC Inc. dated November 3, 2016, announcing its third quarter financial results is being furnished as part of this report.
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:||November 3, 2016||
/s/ Stephen M. Kovzan
Stephen M. Kovzan
Chief Financial Officer
- 3 -
NIC Earns 24 Cents Per Share in Third Quarter 2016 on Total Revenues of $80.4 Million
Company Declares Special Cash Dividend of $0.65 per Share, Initiates Regular Quarterly Cash Dividend Beginning in First Quarter 2017
OLATHE, Kan.--(BUSINESS WIRE)--November 3, 2016--NIC Inc. (NASDAQ: EGOV), the leading provider of digital government services, today announced net income of $16.2 million and earnings per share of 24 cents on total revenues of $80.4 million for the three months ended September 30, 2016. In the third quarter of 2015, the Company reported net income of $12.8 million and earnings per share of 19 cents on total revenues of $75.0 million.
For the third quarter of 2016, the Company’s effective tax rate was 20 percent, compared to 36 percent in the prior year quarter. The lower effective tax rate was primarily attributable to favorable tax benefits related to the domestic production activities deduction for the 2015 and 2016 tax years, and an increase in the previously estimated federal research and development tax credit for the 2015 tax year upon the filing of the Company’s 2015 federal tax return during the current quarter. Combined, these discrete tax items increased earnings per share for the current quarter by approximately 5 cents.
Quarterly portal revenues were $75.0 million, a 7 percent increase over the third quarter of 2015. On a same-state basis, portal revenues were $73.6 million in the current quarter, a 5 percent increase over the third quarter of 2015. Same-state, transaction-based revenues from Interactive Government Services (IGS) rose 12 percent over the third quarter of 2015, due primarily to higher volumes from a variety of services including motor vehicle inspections and registrations, business registration filings, and outdoor recreational licensing, among others. Same-state, transaction-based revenues from Driver History Records (DHR) were down 1 percent and same-state portal software development revenues decreased 27 percent due to the timing of project-based initiatives across several portals.
Current quarter revenues from the Company’s newest portal in Louisiana totaled $1.4 million for the portal’s first full quarter of providing enterprise-wide digital government services.
Software & services revenues were $5.4 million in the current quarter, up 9 percent from the third quarter of 2015, driven by an increase in transactional revenues from the federal Pre-employment Screening Program and other payment processing services.
Quarterly operating income before taxes increased 2 percent to $20.4 million, resulting in an operating margin of 25 percent for the current quarter, compared to 27 percent in the prior year quarter.
“This continues to be a year of solid, steady results for NIC,” said Harry Herington, NIC’s Chief Executive Officer and Chairman of the Board. “Every day our goal is to launch new digital government solutions and to enhance existing online services in order to deliver efficiencies to citizens and businesses – the third quarter of 2016 was no exception.”
Declaration of Special Dividend and Initiation of Regular Dividend in 2017
On November 1, 2016, NIC’s Board of Directors declared a special cash dividend of 65 cents per share, payable on December 9, 2016 to stockholders of record on November 16, 2016. The dividend payout will total approximately $43.3 million based on the current number of shares outstanding.
In addition, the Company’s Board of Directors approved the initiation of a regular quarterly cash dividend at a rate of $0.08 per share. The Company currently intends to commence the regular dividend in the first quarter of 2017. While the declaration of future dividends is subject to final determination and approval of the Company’s Board of Directors, the Company currently intends to pay regular cash dividends for the foreseeable future.
“NIC’s financial success has allowed us to again return capital to stockholders with the payment of a special cash dividend in December 2016 and the initiation of a regular quarterly cash dividend beginning in the first quarter of 2017,” said Mr. Herington. “While we may pay special dividends from time to time in the future as our liquidity permits, we believe the time is right to initiate a regular quarterly cash dividend, as it solidifies our commitment to providing ongoing value to stockholders and reinforces our positive outlook.”
During the third quarter of 2016, the Company’s NICUSA Maryland Division received a one-year contract extension which also includes a one-year renewal option that can be exercised at the option of the state of Maryland, which would take the contract through August 2019. The Company also signed a one-year contract extension with the Federal Motor Carrier Safety Administration to manage the Pre-Employment Screening Program. The contract runs through August 2017 and includes an additional one-year renewal option that can be exercised to extend the contract through August 2018. In addition, Virginia Interactive, LLC received a one-year contract extension from Stafford County of the Commonwealth of Virginia, which includes the agreement with the Supreme Court of Virginia to provide digital government services through August 2017. The contract also includes six, one-year renewal options that can be exercised to extend the contract through August 2023.
Third Quarter Earnings Call and Webcast Details
On the November 3, 2016 call, the Company will discuss its 2016 third quarter financial and operational results, and answer questions from the investment community. The call may also include discussion of Company developments, and forward-looking and other material information about business and financial matters.
|Thursday, November 3, 2016|
|4:30 p.m. (EDT)|
|Call bridge:||888-287-5516 (U.S. callers) or 719-325-2173 (international callers)|
|Call leaders:||Harry Herington, Chief Executive Officer and Chairman of the Board|
|Steve Kovzan, Chief Financial Officer|
|Robert Knapp, Chief Operating Officer|
To sign in and listen: The Webcast system is available at https://www.egov.com/investor-relations .
A replay of the Webcast will be available by visiting https://www.egov.com/investor-relations .
Founded in 1992, NIC Inc. (NASDAQ: EGOV) is the nation's leading provider of official government websites, online services, and secure payment processing solutions. The Company's innovative digital government services help make government more accessible to everyone through technology. The family of NIC companies provides digital government solutions for more than 4,500 federal, state, and local agencies in the United States. Forbes has named NIC as one of the “100 Best Small Companies in America” six times, and the Company has been included four times on the Barron’s 400 Index. Additional information is available at https://www.egov.com .
Cautionary Statement Regarding Forward-Looking Information
Any statements included in this release that do not relate to historical or current facts constitute forward-looking statements. These statements include estimates, projections, the expected length of contract terms, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements, including regional or national business, political, economic, competitive, social and market conditions, including various termination rights of the Company and its partners, the ability of the Company to renew existing contracts, and to sign contracts with new states, and federal and local government agencies, as well as possible data security incidents. You should not rely on any forward-looking statement as a prediction or guarantee about the future. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the sections titled “Risk Factors” and “Caution About Forward-Looking Statements” of the Company’s most recent Forms 10-K and 10-Q filed with the SEC. These filings are available at the SEC's web site at www.sec.gov. Any forward-looking statements made in this release speak only as of the date of this release. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
|Thousands except per share amounts and percentages|
|Three months ended||Nine months ended|
|September 30,||September 30,|
|Software & services revenues||5,376||4,924||15,866||14,151|
|Cost of portal revenues, exclusive of depreciation & amortization||45,140||41,058||134,878||125,367|
|Cost of software & services revenues, exclusive of depreciation &|
|Selling & administrative||11,676||10,577||34,183||31,933|
|Depreciation & amortization||1,674||2,116||5,074||6,712|
|Total operating expenses||59,985||55,116||178,488||167,988|
|Operating income before income taxes||20,388||19,931||61,085||53,230|
|Income tax provision||4,153||7,181||18,895||20,236|
|Basic net income per share||$||0.24||$||0.19||$||0.63||$||0.50|
|Diluted net income per share||$||0.24||$||0.19||$||0.63||$||0.50|
|Weighted average shares outstanding:|
|Key Financial Metrics:|
|Revenue growth - outsourced portals||7||%||7||%||8||%||7||%|
|Same state revenue growth - outsourced portals||5||%||8||%||7||%||8||%|
|Recurring portal revenue as a % of total portal revenues||97||%||96||%||96||%||96||%|
|Gross profit % - outsourced portals||40||%||41||%||40||%||39||%|
|Revenue growth - software & services||9||%||17||%||12||%||13||%|
|Gross profit % - software & services||72||%||72||%||73||%||72||%|
|Selling & administrative expenses as a % of total revenues||15||%||14||%||14||%||14||%|
|Operating income as a % of total revenue||25||%||27||%||25||%||24||%|
|Portal Revenue Analysis:|
|Portal software development||2,117||2,887||8,112||8,659|
|Total portal revenues||$||74,997||$||70,123||$||223,707||$||207,067|
|CONSOLIDATED BALANCE SHEETS|
|Thousands except par value amount|
|September 30, 2016||December 31, 2015|
|Cash||$ 151,430||$ 98,388|
|Cash restricted for payment of dividend||-||36,456|
|Trade accounts receivable, net||82,022||80,362|
|Prepaid expenses & other current assets||14,450||12,584|
|Total current assets||247,902||227,790|
|Property and equipment, net||9,063||9,333|
|Intangible assets, net||3,139||2,267|
|Deferred income taxes, net||1,804||1,421|
|Total assets||$ 262,365||$ 241,237|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable||$ 71,325||$ 61,133|
|Other current liabilities||2,752||2,597|
|Total current liabilities||94,700||121,172|
|Other long-term liabilities||5,823||4,259|
|Commitments and contingencies||-||-|
|Common stock, $0.0001 par, 200,000 shares authorized,|
|65,979 and 65,637 shares issued and outstanding||7||7|
|Additional paid-in capital||104,748||100,929|
|Total stockholders' equity||161,842||115,806|
|Total liabilities and stockholders' equity||$ 262,365||$ 241,237|
|CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY|
|Balance, January 1, 2016||65,637||$||7||$||100,929||$||14,870||$||115,806|
|Restricted stock vestings||385||-||135||-||135|
|Dividend equivalents cancelled upon forfeiture of|
|performance-based restricted stock awards||-||-||-||27||27|
|Shares surrendered and cancelled upon vesting of restricted|
|stock to satisfy tax withholdings||(118||)||-||(2,105||)||-||(2,105||)|
|Tax deductions relating to stock-based compensation||-||-||435||-||435|
|Shares issuable in lieu of dividend payments on unvested|
|performance-based restricted stock awards||-||-||(162||)||-||(162||)|
|Issuance of common stock under employee stock purchase plan||75||-||1,114||-||1,114|
|Balance, September 30, 2016||65,979||$||7||$||104,748||$||57,087||$||161,842|
|CASH FLOW SUMMARY|
|Nine months ended|
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation & amortization||5,074||6,712|
|Stock-based compensation expense||4,402||5,385|
|Deferred income taxes||(2,702||)||(3,708||)|
|Loss on disposal of property and equipment||7||26|
|Changes in operating assets and liabilities:|
|(Increase) in trade accounts receivable, net||(1,660||)||(21,153||)|
|Decrease in prepaid expenses & other current assets||453||3,673|
|(Increase) decrease in other assets||(31||)||13|
|Increase in accounts payable||10,192||13,833|
|(Decrease) in accrued expenses||(2,468||)||(847||)|
|Increase (decrease) in other current liabilities||155||(432||)|
|Increase in other long-term liabilities||1,564||475|
|Net cash provided by operating activities||57,176||36,971|
|Cash flows from investing activities:|
|Purchases of property and equipment||(3,927||)||(3,257||)|
|Proceeds from sale of property and equipment||6||3|
|Capitalized internal use software development costs||(1,762||)||(624||)|
|Net cash used in investing activities||(5,683||)||(3,878||)|
|Cash flows from financing activities:|
|Proceeds from employee common stock purchases||1,114||1,131|
|Tax deductions related to stock-based compensation||435||236|
|Net cash provided by financing activities||1,549||1,367|
|Net increase in cash||53,042||34,460|
|Cash, beginning of period||98,388||87,983|
|Cash, end of period||$||151,430||$||122,443|
|Other cash flow information:|
|Non-cash investing activities:|
|Capital expenditures accrued but not yet paid||$||-||$||86|
|Income taxes paid||$||17,268||$||19,509|
|Cash dividends on common stock previously restricted for payment of dividend||$||36,456||$||-|