SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 31, 2017
(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 chnged since last report)
Check the 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 August 2, 2017, NIC Inc. (the “Company”) issued a press release announcing its 2017 second quarter financial results. A copy of the press release is furnished with this report on Form 8-K as Exhibit 99.1, and is incorporated by reference herein.
ITEM 5.05 AMENDMENTS TO THE REGISTRANT’S CODE OF ETHICS, OR WAIVER OF A PROVISION OF THE CODE OF ETHICS
(a) On July 31, 2017, the Board of Directors of the Company adopted amendments to the Company’s Code of Business Conduct and Ethics (“Code of Conduct”). The Company’s amended Code of Conduct is available on the Company’s website at www.egov.com under the Investor Relations tab and Corporate Governance caption, and can be accessed directly at http://www.egov.com/investor-relations/code-of-business-conduct-and-ethics .
A number of the amendments to the Code of Conduct involve changes in language, appearance and style, including the use of defined terms, all of which are designed to enhance readers’ understanding of its provisions. The Code of Conduct was also amended to add an anti-money laundering provision and to remove language that the Company considered to be dated or duplicative and unnecessary.
The amendments took effect immediately upon adoption by the Board of Directors and did not result in any waiver, explicit or implicit, of any provision of the Company’s previous Code of Conduct.
The foregoing description does not purport to be a complete description of the amendments to the Code of Conduct and the above description is qualified in its entirety by reference to the complete Code of Conduct, as amended.
ITEM 7.01 REGULATION FD DISCLOSURE
The Company will host a conference call, which will also be available by webcast, to discuss its second quarter financial results at 4:30 p.m. EDT on August 2, 2017. 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.
99.1 - Press release issued by NIC Inc. dated August 2, 2017, announcing its second 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:||August 2, 2017||
/s/ Stephen M. Kovzan
Stephen M. Kovzan
Chief Financial Officer
- 3 -
NIC Earns 19 Cents Per Share in Second Quarter 2017 on Record Total Revenues of $85.3 Million
Successful core digital government services drive solid same state growth;
Company declares regular quarterly dividend of 8 cents per share
OLATHE, Kan.--(BUSINESS WIRE)--August 2, 2017--NIC Inc. (NASDAQ: EGOV), the dominant provider of digital government services, today announced net income of $12.8 million and earnings per share of 19 cents on record total revenues of $85.3 million for the three months ended June 30, 2017. In the second quarter of 2016, the Company reported net income of $13.1 million and earnings per share of 20 cents on total revenues of $80.8 million.
Quarterly portal revenues were a record $79.4 million, a 5 percent increase over the second quarter of 2016. On a same-state basis, portal revenues were $77.6 million in the current quarter, a 7 percent increase over the second quarter of 2016. Same-state, transaction-based revenues from Interactive Government Services (IGS) rose 12 percent over the second quarter of 2016, due primarily to higher volumes from a variety of services including motor vehicle inspections and registrations and business filings, among others. Same-state, transaction-based revenues from Driver History Records (DHR) were up 1 percent. Same-state portal software development and services revenues decreased 22 percent, due to the timing of project-based, time and material initiatives across several portals.
Second quarter 2017 revenues from the Company’s newest portal in Louisiana totaled $1.7 million, compared to $0.3 million in the prior year quarter during the pilot phase of the contract. In the prior year quarter, revenues from the legacy Tennessee portal contract totaled $2.0 million, while revenues from the legacy Iowa portal contract totaled $0.5 million. As previously announced, the Company’s contract with the state of Tennessee expired on March 31, 2017, and the Company’s contract with the state of Iowa expired on November 30, 2016.
Software & services revenues were $6.0 million in the current quarter, up 12 percent from the second quarter of 2016, driven by an increase in revenues from the delivery of the Library of Congress Copyright Royalty Board electronic filing and case management system and from an increase in transactional revenues from the federal Pre-employment Screening Program.
NIC’s operating income margin was 23 percent for the current quarter, down from 25 percent in the prior year quarter. This decrease reflects higher development costs for the new enterprise licensing and permitting platform to be used for the state of Illinois and other NIC partner states, a decrease in profit contribution from the legacy Tennessee portal contract, and higher selling & administrative expenses due mainly to personnel-related costs and costs to support and enhance corporate-wide information technology, security and portal operations, including development of the citizen-centric Gov2Go enterprise platform.
“I was pleased to see continued solid growth of our core business during the second quarter,” said Harry Herington, NIC Chief Executive Officer and Chairman of the Board. “Transaction-based services are the foundation of our business, and every quarter I am impressed with the new services our teams launch on behalf of our government partners.”
Declaration of Quarterly Dividend
On July 31, 2017, NIC’s Board of Directors declared a regular quarterly cash dividend of 8 cents per share to be paid on September 20, 2017 to stockholders of record as of the close of business on September 6, 2017. The dividend is expected to total approximately $5.4 million and will be paid out of NIC’s available cash.
During the quarter, the Company signed a contract with the state of Illinois to develop an enterprise licensing and permitting platform. The agreement includes a six-year base contract, with four, one-year renewal options the state can exercise to extend the contract through July 2027.
In addition, several NIC subsidiaries received contract extensions during the second quarter of 2017. The Company’s subsidiaries, Rhode Island Interactive, LLC, and New Mexico Interactive, LLC, received one-year contract extensions from the state of Rhode Island and New Mexico, respectively, taking both contracts through June 2018. Also, the Federal Motor Carrier Safety Administration exercised a one-year extension with the Company, taking the contract to manage the Pre-Employment Screening Program through August 2018. In addition, the state of Pennsylvania awarded NIC’s subsidiary, Pennsylvania Interactive, LLC, a two-year contract extension taking the agreement through November 2019.
Second Quarter Earnings Call and Webcast Details
On the August 2, 2017 call, the Company will discuss its 2017 second 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.
Wednesday, August 2, 2017
4:30 p.m. (EDT)
|Call bridge:||866-548-4713 (U.S. callers) or 323-794-2093 (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 celebrating 25 years as the nation’s premier provider of innovative digital government solutions and secure payment processing, which help make government interactions more accessible for everyone through technology. The family of NIC companies has developed a library of more than 13,000 digital government services for more than 5,500 federal, state, and local government agencies. Among these solutions is the ground-breaking digital government personal assistant, Gov2Go, delivering citizens personalized reminders and a single access point for government interactions. More information is available at 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, statements relating to possible future dividends, 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||Six months ended|
|June 30,||June 30,|
|Software & services revenues||5,952||5,297||11,931||10,490|
|Cost of portal revenues, exclusive of depreciation & amortization||49,009||46,123||96,041||89,738|
|Cost of software & services revenues, exclusive of depreciation &|
|Selling & administrative||13,131||11,165||24,791||22,507|
|Depreciation & amortization||1,688||1,736||3,301||3,400|
|Total operating expenses||65,607||60,469||127,675||118,503|
|Operating income before income taxes||19,719||20,341||40,828||40,697|
|Income tax provision||6,950||7,280||14,074||14,742|
|Basic net income per share||$||0.19||$||0.20||$||0.40||$||0.39|
|Diluted net income per share||$||0.19||$||0.20||$||0.40||$||0.39|
|Weighted average shares outstanding:|
|Key Financial Metrics:|
|Revenue growth - outsourced portals||5||%||6||%||5||%||9||%|
|Same state revenue growth - outsourced portals||7||%||6||%||6||%||9||%|
|Recurring portal revenue as a % of total portal revenues||97||%||96||%||97||%||96||%|
|Gross profit % - outsourced portals||38||%||39||%||39||%||40||%|
|Revenue growth - software & services||12||%||11||%||14||%||14||%|
|Gross profit % - software & services||70||%||73||%||70||%||73||%|
|Selling & administrative expenses as a % of total revenues||15||%||14||%||15||%||14||%|
|Operating income as a % of total revenue||23||%||25||%||24||%||26||%|
|Portal Revenue Analysis:|
|Portal software development||2,193||3,132||4,022||5,995|
|Total portal revenues||$||79,374||$||75,513||$||156,572||$||148,710|
|CONSOLIDATED BALANCE SHEETS|
|Thousands except par value amount|
|June 30, 2017||December 31, 2016|
|Trade accounts receivable, net||79,349||82,722|
|Prepaid expenses & other current assets||12,382||15,033|
|Total current assets||227,117||224,764|
|Property and equipment, net||9,653||9,726|
|Intangible assets, net||4,484||3,588|
|Deferred income taxes, net||1,511||2,307|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Other current liabilities||3,794||3,150|
|Total current liabilities||84,718||99,797|
|Other long-term liabilities||8,172||7,162|
|Commitments and contingencies||-||-|
|Common stock, $0.0001 par, 200,000 shares authorized,|
|66,265 and 65,982 shares issued and outstanding||7||7|
|Additional paid-in capital||108,996||106,669|
|Total stockholders' equity||151,859||133,903|
|Total liabilities and stockholders' equity||$||244,749||$||240,862|
|CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY|
|Balance, January 1, 2017 (previously reported)||65,982||$||7||$||106,669||$||27,227||$||133,903|
|Cumulative effect of adoption of new|
|Balance, January 1, 2017 (as adjusted)||65,982||7||107,078||26,818||133,903|
|Restricted stock vestings||319||-||107||-||107|
|Dividend equivalents on performance-based restricted|
|Dividend equivalents cancelled upon forfeiture of||-|
|performance-based restricted stock awards||-||-||-||31||31|
|Shares issuable in lieu of dividend payments on unvested|
|performance-based restricted stock awards||-||-||(83||)||-||(83||)|
|Shares surrendered and cancelled upon vesting of|
|restricted stock to satisfy tax withholdings||(123||)||-||(2,614||)||-||(2,614||)|
|Issuance of common stock under employee stock purchase plan||87||-||1,330||-||1,330|
|Balance, June 30, 2017||66,265||$||7||$||108,996||$||42,856||$||151,859|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|Six months ended|
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Provision for losses (recoveries) on accounts receivable||379||(23||)|
|Depreciation & amortization||3,301||3,400|
|Stock-based compensation expense||3,178||3,005|
|Deferred income taxes||796||51|
|Excess tax benefits from stock-based compensation||-||427|
|(Gain) loss on disposal of property and equipment||39||(4||)|
|Changes in operating assets and liabilities:|
|Decrease in trade accounts receivable, net||2,994||2,941|
|(Increase) decrease in prepaid expenses & other current assets||2,651||(2,168||)|
|(Increase) in other assets||(1,507||)||(26||)|
|Increase (decrease) in accounts payable||(14,535||)||1,599|
|(Decrease) in accrued expenses||(1,271||)||(1,515||)|
|Increase in other current liabilities||644||169|
|Increase in other long-term liabilities||1,010||746|
|Net cash provided by operating activities||24,433||34,557|
|Cash flows from investing activities:|
|Purchases of property and equipment||(2,395||)||(2,748||)|
|Proceeds from sale of property and equipment||7||6|
|Capitalized internal use software development costs||(1,692||)||(1,142||)|
|Net cash used in investing activities||(4,080||)||(3,884||)|
|Cash flows from financing activities:|
|Cash dividends on common stock||(10,692||)||-|
|Proceeds from employee common stock purchases||1,330||1,114|
|Tax withholdings related to stock-based compensation awards||(2,614||)||(2,073||)|
|Net cash used in financing activities||(11,976||)||(959||)|
|Net increase in cash||8,377||29,714|
|Cash, beginning of period||127,009||98,388|
|Cash, end of period||$||135,386||$||128,102|
|Other cash flow information:|
|Non-cash investing activities:|
|Capital expenditures accrued but not yet paid||$||83||$||27|
|Income taxes paid||$||12,405||$||13,941|
|Cash dividends on common stock previously restricted for payment of dividend||$||-||$||36,456|
Angela Davied, 913-754-7054