 |
4Q 2003 EARNINGSFor Immediate Release |
| Contact: Chris Neff 435-645-8898 cneff@nicusa.com |
NIC Reports Record Fourth Quarter 2003 Results
as Operating Income Rises 63 Percent
OLATHE, Kan. – January 29, 2004 – NIC Inc. (Nasdaq: EGOV) today reported net income of $2.9 million and earnings per share of five cents on total revenues of $12.5 million for the three months ended December 31, 2003. During the previous year quarter, the Company posted net income of $455,000 and earnings per share of one cent on total revenues of $10.8 million. Driven by the continued strength of the core outsourced portal business, NIC's operating income rose 63 percent to $1.8 million in the fourth quarter, up from $1.1 million a year ago.
Fourth quarter results include a non-recurring income tax adjustment of approximately $1.8 million, or three cents per share, relating primarily to the expected future utilization of certain net operating loss carryforwards. Absent this adjustment, NIC's continuing operations earned two cents per share for the quarter.
Portal revenues were $10.3 million, a 23 percent increase over the prior year quarter, with portal gross profit rising 38 percent to $4.5 million during the same period. Portal gross profit percentage was 44 percent for fourth quarter 2003, up from 39 percent during fourth quarter 2002.
Same state revenues for the portal business grew 13 percent in the fourth quarter, compared to a six percent increase in third quarter 2003. Same state revenues from the sale of driver histories (DMV) rose four percent over last year's fourth quarter, while same state non-DMV revenues grew 32 percent during the same period.
"NIC's portal operations are healthier than ever, and we keep finding new ways to grow this business," said Jeff Fraser, Chief Executive Officer of NIC. "We launched 70 revenue-generating non-DMV services this quarter, and one of NIC's top priorities in 2004 is to further increase market penetration in our existing 18 state installations."
As expected, fourth quarter results for the software and services business decreased moderately from third quarter 2003.
Selling and administrative expenses for the quarter were $2.8 million, or 22 percent of revenue, down from 23 percent in the prior year quarter. "We did a good job of driving down expenses in 2003, and this is an area of continued focus in the new year," said Eric Bur, NIC's Chief Financial Officer.
NIC ended the fourth quarter with $19.2 million in cash and equivalents, up $2.9 million from September 30, 2003. During the same period, net working capital grew by $2.2 million to $24.4 million.
For the fiscal year, NIC posted operating income of $7.3 million, compared to an operating loss of $7.9 million the previous year. Portal revenues rose 16 percent to $40.2 million in 2003, with non-DMV revenues growing 35 percent for the year. Selling and administrative costs dropped 12 percent to $11.7 million for 2003, and as a percentage of revenue dipped to 23 percent from 28 percent during the prior year. The Company earned 11 cents per share in 2003 (eight cents excluding the income tax adjustment), compared to a loss per share of 13 cents in 2002.
Fourth Quarter Operating Highlights
During the fourth quarter, Nebraska completed its competitive bid process and signed a new long-term outsourced portal services contract this month with NIC's Nebraska Interactive subsidiary. Nebraska launched its eGovernment services in 1995 and was NIC's second portal installation. The new self-funded agreement will span up to six years. During the quarter, NIC also completed a successful implementation of a unique point-of-sale hunting and fishing licensing system in cooperation with the state of Alabama and Wal-Mart Stores, Inc.
"We thank Nebraska for their vote of confidence, and we look forward to continuing this successful relationship," continued Fraser. "In addition, we are excited about our new point-of-sale hunting and fishing system in Alabama and are eager to expand this relationship with Wal-Mart into other states."
First Quarter and Full-Year 2004 Outlook
For first quarter 2004, NIC expects total revenues of $13.4 - $13.9 million, portal revenues of $11.4 - $11.6 million, and software and services revenues of $2.0 - $2.3 million. The Company also anticipates operating income between $2.1 - $2.3 million and net income of $1.3 - $1.4 million.
For full-year 2004, NIC is comfortable with the current First Call mean estimates: Total revenues of $54.4 - $55.3 million, portal revenues of $46.6 - $47.3 million, and software and services revenues of $7.8 - $8.0 million. In addition, the Company expects operating income between $11.0 - $11.3 million and net income of $6.5 - $6.8 million.
NIC's first quarter and full-year 2004 estimates do not include new contracts.
Fourth Quarter Earnings Webcast Details
Webcast Information
Thursday, January 29, 2004
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 April 29 by visiting www.nicusa.com/investor. A telephone replay of the call will also be available until 5:00 p.m. ET on February 5 by dialing 1-800-405-2236 and using passcode 566221.
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 Twelve months
ended ended
December 31, December 31,
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Portal revenues $10,328 $ 8,428 $40,209 $34,779
Software and services revenues 2,205 2,419 10,622 12,766
------ ------ ------ ------
Total revenues 12,533 10,847 50,831 47,545
------ ------ ------ ------
Cost of revenues:
Cost of portal revenues,
exclusive of depreciation
and amortization 5,805 5,142 21,586 19,855
Cost of software and services
revenues, exclusive of
depreciation and amortization 1,781 1,550 8,443 13,688
Selling and administrative 2,772 2,492 11,681 13,322
Impairment loss - - - 4,316
Stock compensation - - - 1,307
Depreciation and amortization 370 555 1,783 2,988
------ ------ ------ ------
Total operating expenses 10,728 9,739 43,493 55,476
------ ------ ------ ------
Operating income (loss) 1,805 1,108 7,338 (7,931)
------ ------ ------ ------
Other income (expense):
Interest income 20 46 100 180
Interest expense (5) 4 (20) (49)
Equity in net loss of affiliates (54) (267) 107 (1,235)
Other income (expense), net - (35) (12) (72)
------ ------ ------ ------
Total other income (expense) (39) (252) 175 (1,176)
------ ------ ------ ------
Income (loss) from continuing
operations before income taxes 1,766 856 7,513 (9,107)
Income tax provision (benefit) (1,134) 401 1,185 (3,532)
------ ------ ------ ------
Income (loss) from continuing
operations 2,900 455 6,328 (5,575)
Discontinued operations:
Loss from discontinued
operations (less
applicable income tax benefit
of $-, $-, $-, and $1,307) - - - (2,035)
------ ------ ------ ------
Net income (loss) $ 2,900 $ 455 $ 6,328 $(7,610)
------ ------ ------ ------
Basic and diluted earnings (loss)
per share:
Earnings (loss) per share -
continuing operations $ 0.05 $ 0.01 $ 0.11 $ (0.10)
------ ------ ------ ------
Loss per share - discontinued
operations $ - $ - $ - $ (0.03)
------ ------ ------ ------
Net earnings (loss) per share $ 0.05 $ 0.01 $ 0.11 $ (0.13)
------ ------ ------ ------
Weighted average shares
outstanding:
Basic 58,593 57,824 58,331 56,875
------ ------ ------ ------
Diluted 60,847 57,860 59,269 56,875
------ ------ ------ ------
Key Financial Metrics:
Revenue growth - outsourced portals 23% 20% 16% 32%
Revenue growth - software and services (9%) - (17%) 20%
Gross margin - outsourced portals 44% 39% 46% 43%
Gross margin - software and services 19% 36% 21% (7%)
Selling and administrative costs
as a % of revenue 22% 23% 23% 28%
Operating margin % 14% 10% 14% (17%)
Portal Revenue Analysis (Thousands):
DMV transaction-based $ 6,617 $ 5,252 $25,088 $22,253
Non-DMV transaction-based 2,909 2,267 10,846 8,065
Portal management 301 290 1,200 1,274
Software development 501 619 3,075 3,187
------ ------ ------ ------
Total $10,328 $ 8,428 $40,209 $34,779
------ ------ ------ ------
NIC Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Thousands except for share amounts
December 31, December 31,
2003 2002
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 13,540 $ 9,559
Cash and cash equivalents - restricted 5,363 6,300
Marketable securities 249 249
Trade accounts receivable 17,872 14,465
Deferred income taxes 181 606
Prepaid expenses 698 761
Other current assets 8,845 3,215
--------- ---------
Total current assets 46,748 35,155
Property and equipment, net 2,992 3,054
Deferred income taxes 35,168 35,049
Other assets 110 139
Investments in affiliates 644 839
Intangible assets, net 77 220
--------- ---------
Total assets $ 85,739 $ 74,456
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,345 $ 12,701
Accrued expenses 5,245 3,792
Note payable - current portion 156 332
Application development contracts 465 1,559
Other current liabilities 158 815
--------- ---------
Total current liabilities 22,369 19,199
Note payable - long-term portion 207 201
--------- ---------
Total liabilities 22,576 19,400
Commitments and contingencies - -
Shareholders' equity:
Common stock, no par, 200,000,000 shares
authorized 58,715,672 and 58,092,346
shares issued and outstanding - -
Additional paid-in capital 198,929 197,160
Accumulated deficit (135,561) (141,889)
--------- ---------
63,368 55,271
Less treasury stock (205) (215)
--------- ---------
Total shareholders' equity 63,163 55,056
--------- ---------
Total liabilities and shareholders' equity $ 85,739 $ 74,456
--------- ---------
NIC Inc.
CASH FLOW SUMMARY
(UNAUDITED)
Thousands
Three months ended Twelve months ended
December 31, December 31,
2003 2002 2003 2002
---- ---- ---- ----
Cash flows from operating
activities:
Net income (loss) $ 2,900 $ 455 $ 6,328 $ (7,610)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 370 555 1,783 3,379
Compensation expense
recognized related to
stock options - - - 1,307
Loss on disposal of
property and equipment - 310 12 1,769
Accretion of discount
on marketable securities - - - (4)
Application development
contracts (98) (1,545) (1,094) (2,403)
Impairment loss - - - 4,316
Deferred income taxes (777) 312 1,399 (6,191)
Deferred income tax
benefit relating to
stock options (459) - (546) 1,146
Equity in net loss of
affiliates 54 267 (107) 1,235
Changes in operating assets
and liabilities
(Increase) decrease in
trade accounts
receivable (604) 172 (3,407) (2,634)
(Increase) decrease in
prepaid expenses 109 (112) 63 (138)
(Increase) in other
current assets (1,101) (655) (5,619) (406)
Decrease in other
assets 8 39 29 110
Increase in accounts
payable 3,051 1,442 3,594 1,469
Increase (decrease) in
accrued expenses (466) (1,006) 1,493 (1,617)
(Decrease) in other
current liabilities (266) (252) (356) (95)
------ ----- ----- -----
Net cash provided by (used
in) operating activities 2,721 (18) 3,572 (6,367)
------ ----- ----- -----
Cash flows from investing
activities:
Purchases of property and
equipment (445) (324) (1,519) (968)
Purchases of marketable
securities - (2,746) (249) (23,745)
Maturities of marketable
securities - 9,659 249 27,566
Investments in affiliates and
joint ventures - - - (191)
------ ----- ----- -----
Net cash provided by (used
in) investing activities (445) 6,589 (1,519) 2,662
------ ----- ----- -----
Cash flows from financing
activities:
(Increase) decrease in cash
and cash equivalents -
restricted 38 (6,300) 937 (6,300)
Payments on notes payable (38) (102) (170) (340)
Payments on capital lease
obligation - (6) - (14)
Payments to repurchase common
stock - (215) - (215)
Proceeds from exercise of
employee stock options 621 1,236 1,161 2,882
Proceeds from stock
subscriptions receivable - - - 15
------ ----- ----- -----
Net cash provided (used in)
by financing activities 621 (5,387) 1,928 (3,972)
------ ----- ----- -----
Net increase (decrease) in cash
and cash equivalents 2,897 1,184 3,981 (7,677)
Cash and cash equivalents,
beginning of period 10,643 8,375 9,559 17,236
------ ----- ----- -----
Cash and cash equivalents, end
of period $13,540 $ 9,559 $13,540 $ 9,559
------ ----- ----- -----
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