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3Q 2003 EARNINGSFor Immediate Release |
| Contact: Chris Neff 435-645-8898 cneff@nicusa.com |
NIC Reports Third Quarter 2003 Net Income of $1.1 Million
Innovative new services drive 47% increase in same state non-DMV revenue
OLATHE, Kan. - October 30, 2003 - NIC Inc. (Nasdaq: EGOV) today reported net income of $1.1 million and earnings per share of 2 cents for the three months ended September 30, 2003, as compared to net income of $212,000 in third quarter 2002. Operating margins were 14% for the quarter, compared to 6% a year ago.
Revenues for NIC's core outsourced portal business were $9.9 million, up 12 percent over the prior year quarter. During the same period, portal gross profit rose by 17 percent. The Company posted a 46 percent gross profit percentage for the portal business, up from 43 percent during the same period last year. Total revenues for the quarter were $12.9 million, up from $11.7 million in third quarter 2002.
Portal revenue growth included a 47 percent increase in same state non-DMV revenue in the current quarter. Non-DMV growth for the quarter was driven primarily by the addition of more than 70 revenue-generating services and higher usage for NIC's eGovernment applications.
"Non-DMV revenue growth is a key indicator of long-term strength in our core business," said Jeff Fraser, Chief Executive Officer of NIC. "Our 47% growth in the third quarter demonstrates how bringing innovative solutions to our government partners translates into strong results for investors."
The financial performance of the software and services business for the third quarter also matched the Company's expectations.
Selling and administrative expenses for the quarter were $2.9 million, down 12 percent from the same quarter last year. "We continue to be successful in driving down our overhead costs," said Harry Herington, Chief Operating Officer of NIC. "At 22 percent of revenue, selling and administrative expenses are at their lowest level since NIC went public in July 1999."
NIC ended the third quarter with $16.3 million in cash and equivalents, up more than $300,000 from June 30, 2003. During the same period, working capital grew by $2.0 million to $22.2 million.
Third Quarter Operating Highlights
During the third quarter, NIC signed a two-year portal contract extension with the state of Indiana and a one-year renewal agreement with the state of Tennessee. The Company's portal operations were also enhanced by the September 15 launch of a self-funded eGovernment portal for the Commonwealth of Kentucky (www.Kentucky.gov).
This month, eight NIC partners were honored by the Center for Digital Government's 2003 Best of the Web competition for eGovernment excellence. Four of NIC's partners ranked among the top five finishers for state Web sites, including Utah (www.Utah.gov) in first place, Maine (www.Maine.gov) in second, Indiana (www.IN.gov) in third, and Arkansas (www.Arkansas.gov) in fifth place. Indianapolis/Marion County (www.CivicNet.net) ranked third in the county government category, and services for the Maine Secretary of State (www.Maine.gov/sos), Montana's Fish, Wildlife & Parks Department (www.DiscoveringMontana.com), and Iowa State County Treasurers Association (www.IowaTreasurers.org) were also recognized.
In addition, three NIC partners were singled out in the annual eGovernment survey conducted by the Taubman Center for Public Policy at Brown University. Indiana was ranked the third best state for overall eGovernment services, while Tennessee (www.Tennessee.gov) placed fourth and Kentucky was ranked tenth.
"We thank Indiana, Tennessee, and Kentucky for putting their trust in NIC, and we congratulate all of our government partners for their ongoing commitment to offering the best possible eGovernment services to their constituents," concluded Fraser.
Fourth Quarter Outlook
Despite normal fourth quarter seasonality, the Company expects the portal business to drive solid fourth quarter 2003 results. Portal revenues should be comparable to third quarter 2003, as should portal gross margins, selling & administrative costs, operating income, and earnings per share. On the software & services side, revenues and gross margins are expected to decrease moderately.
Third Quarter Earnings Webcast Details
Webcast Information
Thursday, October 30, 2003
9:00 a.m. ET
Call leaders:
Jeff Fraser, Chief Executive Officer
Eric Bur, Chief Financial Officer
Harry Herington, Chief Operating Officer
To sign in and listen: The Webcast system is available at www.nicusa.com/investor.
Some users may need to refresh their browsers to view the Webcast information. A replay of the Webcast will be available until 5:00 p.m. ET on December 30 by visiting www.nicusa.com/investor.
An audio replay of the call will also be available until 5:00 p.m. ET on November 6 by dialing 1-800-405-2236 and using passcode 555404.
About NIC
NIC manages more eGovernment services than any provider in the world. The company is helping governments communicate more effectively with citizens and businesses by putting essential services online. NIC provides eGovernment solutions for 1,400 state and local agencies that serve more than 71 million people in the United States. Additional company information is available at www.nicusa.com.
The statements in this release regarding continued implementation of NIC's business model and its development of new products and services are forward-looking statements. There are a number of important factors that could cause actual results to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, the success of the Company in signing contracts with new states and government agencies, including continued favorable government legislation; NIC's ability to develop new services; existing states and agencies adopting those new services; acceptance of eGovernment services by businesses and citizens; competition; and general economic conditions and the other important cautionary statements and risk factors described in NIC's 2002 Annual Report on Form 10-K filed on March 20, 2003, with the Securities and Exchange Commission.
(financial tables follow)
NIC INC.
FINANCIAL SUMMARY
(UNAUDITED)
(Thousands except for per share amounts)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2003 2002 2003 2002
Revenues:
Portal revenues $ 9,942 $ 8,863 $29,891 $26,351
Software and services revenues 2,931 2,805 8,418 10,348
------ ------ ------ ------
Total revenues 12,873 11,668 38,309 36,699
------ ------ ------ ------
Cost of revenues:
Cost of portal revenues,
exclusive of depreciation and
amortization 5,416 5,065 15,791 14,713
Cost of software and services
revenues, exclusive of
depreciation and amortization 2,276 2,125 6,662 12,138
Selling and administrative 2,852 3,255 8,909 10,831
Impairment loss - - - 4,316
Stock compensation - - - 1,307
Depreciation and amortization 471 567 1,413 2,433
------ ------ ------ ------
Total operating expenses 11,015 11,012 32,775 45,738
------ ------ ------ ------
Operating income (loss) 1,858 656 5,534 (9,039)
------ ------ ------ ------
Other income (expense):
Interest income 21 38 80 134
Interest expense (6) (20) (15) (53)
Equity in net loss of affiliates (41) (286) 161 (968)
Other income (expense), net (12) - (12) (36)
------ ------ ------ ------
Total other income (expense) (38) (268) 214 (923)
------ ------ ------ ------
Income (loss) from continuing
operations before income taxes 1,820 388 5,748 (9,962)
Income tax provision (benefit) 737 168 2,319 (3,933)
------ ------ ------ ------
Income (loss) from continuing
operations 1,083 220 3,429 (6,029)
Discontinued operations:
Loss from discontinued operations
(less applicable income tax
benefit of $-, $5, $-, and $1,307) - (8) - (2,036)
------ ------ ------ ------
Net income (loss) $ 1,083 $ 212 $ 3,429 $(8,065)
====== ====== ====== ======
Basic and diluted earnings (loss)
per share:
Earnings (loss) per share -
continuing operations $ 0.02 $ 0.00 $ 0.06 $ (0.11)
====== ====== ====== ======
Loss per share - discontinued
operations $ - $ (0.00) $ - $ (0.03)
====== ====== ====== ======
Net earnings (loss) per share $ 0.02 $ 0.00 $ 0.06 $ (0.14)
====== ====== ====== ======
Weighted average shares
outstanding:
Basic 58,357 56,811 58,242 56,556
====== ====== ====== ======
Diluted 59,402 57,006 58,742 56,556
====== ====== ====== ======
Key Financial Metrics:
Revenue growth - outsourced portals 12% 14% 13% 36%
Revenue growth - software and
services 5% (3%) (19%) 26%
Gross profit % - outsourced portals 46% 43% 47% 44%
Gross profit % - software and
services 22% 24% 21% (17%)
Selling and administrative costs as
a % of revenue 22% 28% 23% 30%
Operating margin % 14% 6% 14% (25%)
NIC Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except for share amounts
Sept. 30, Dec. 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $ 10,643 $ 9,559
Cash and cash equivalents - restricted 5,401 6,300
Marketable securities 250 249
Trade accounts receivable 17,268 14,465
Deferred income taxes 219 606
Prepaid expenses 807 761
Other current assets 7,744 3,215
------ ------
Total current assets 42,332 35,155
Property and equipment, net 2,862 3,054
Deferred income taxes 33,435 35,049
Other assets 118 139
Investments in affiliates 698 839
Intangible assets, net 105 220
------ ------
Total assets $ 79,550 $ 74,456
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,274 $ 12,701
Accrued expenses 5,703 3,792
Note payable - current portion 154 332
Application development contracts 563 1,559
Other current liabilities 424 815
------ ------
Total current liabilities 20,118 19,199
Note payable - long-term portion 247 201
------ ------
Total liabilities 20,365 19,400
------ ------
Commitments and contingencies - -
Shareholders' equity:
Common stock, no par, 200,000,000 shares authorized
58,441,075 and 58,092,346 shares issued and
outstanding - -
Additional paid-in capital 197,860 197,160
Accumulated deficit (138,460) (141,889)
------ ------
59,400 55,271
Less treasury stock (215) (215)
------ ------
Total shareholders' equity 59,185 55,056
------ ------
Total liabilities and shareholders' equity $ 79,550 $ 74,456
====== ======
NIC Inc.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
Three months ended Nine months ended
Sept. 30, Sept. 30,
2003 2002 2003 2002
Cash flows from operating activities:
Net income (loss) $ 1,083 $ 212 $ 3,429 $ (8,065)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and amortization 471 567 1,413 2,824
Compensation expense recognized
related to stock options - - - 1,307
Loss on disposal of property and
equipment 12 - 12 1,459
Accretion of discount on
marketable securities - - - (4)
Application development
contracts (264) (2,154) (996) (858)
Impairment loss - - - 4,316
Deferred income taxes 628 143 2,089 (5,311)
Equity in net loss of
affiliates 41 286 (161) 968
Changes in operating assets and
liabilities
(Increase) in trade accounts
receivable (567) (442) (2,803) (2,806)
(Increase) in prepaid expenses (343) (206) (46) (25)
(Increase) decrease in other
current assets (1,198) (638) (4,518) 248
(Increase) decrease in other
assets 7 (22) 21 71
Increase (decrease) in accounts
payable (960) 942 554 27
Increase (decrease) in accrued
expenses 1,225 273 1,959 (595)
Increase (decrease) in other
current liabilities 308 9 (90) 110
------ ------ ------ ------
Net cash provided by (used in)
operating activities 443 (1,030) 863 (6,334)
------ ------ ------ ------
Cash flows from investing activities:
Purchases of property and equipment (453) (341) (1,075) (644)
Purchases of marketable securities - (404) - (20,999)
Maturities of marketable securities - 866 - 17,907
Investments in affiliates and joint
ventures - (191) - (191)
------ ------ ------ ------
Net cash used in investing
activities (453) (70) (1,075) (3,927)
------ ------ ------ ------
Cash flows from financing activities:
Decrease in cash and cash
equivalents - restricted 36 - 899 -
Payments on notes payable (36) (84) (132) (237)
Payments on capital lease
obligation - (2) - (8)
Proceeds from exercise of employee
stock options 396 1,029 529 1,646
------ ------ ------ ------
Net cash provided by financing
activities 396 943 1,296 1,401
------ ------ ------ ------
Net increase (decrease) in cash and
cash equivalents 386 (157) 1,084 (8,860)
Cash and cash equivalents, beginning
of period 10,257 8,532 9,559 17,235
------ ------ ------ ------
Cash and cash equivalents, end of
period $10,643 $ 8,375 $10,643 $ 8,375
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