Delaware | 0-14112 | 43-1128385 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
JACK HENRY & ASSOCIATES, INC. | |||
(Registrant) | |||
Date: | May 3, 2016 | /s/ Kevin D. Williams | |
Kevin D. Williams | |||
Chief Financial Officer and Treasurer |
Jack Henry & Associates, Inc. | Analyst & IR Contact: | Kevin D. Williams |
663 Highway 60, P.O. Box 807 | Chief Financial Officer | |
Monett, MO 65708 | (417) 235-6652 |
Revenue, Cost of Sales, and Gross Profit | |||||||||||||||||||
(In Thousands) | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Revenue | |||||||||||||||||||
License | $ | 292 | $ | 569 | (49 | )% | $ | 2,530 | $ | 1,563 | 62 | % | |||||||
Percentage of Total Revenue | <1% | <1% | <1% | <1% | |||||||||||||||
Support and Service | 319,649 | 296,896 | 8 | % | 947,615 | 882,017 | 7 | % | |||||||||||
Percentage of Total Revenue | 96 | % | 96 | % | 96 | % | 96 | % | |||||||||||
Hardware | 13,245 | 12,244 | 8 | % | 37,532 | 38,897 | (4 | )% | |||||||||||
Percentage of Total Revenue | 4 | % | 4 | % | 4 | % | 4 | % | |||||||||||
Total Revenue | 333,186 | 309,709 | 8 | % | 987,677 | 922,477 | 7 | % | |||||||||||
Cost of Sales | |||||||||||||||||||
Cost of License | 193 | 285 | (32 | )% | 873 | 1,002 | (13 | )% | |||||||||||
Cost of Support and Service | 184,527 | 168,457 | 10 | % | 541,230 | 503,925 | 7 | % | |||||||||||
Cost of Hardware | 9,553 | 9,152 | 4 | % | 26,279 | 28,111 | (7 | )% | |||||||||||
Total Cost of Sales | 194,273 | 177,894 | 9 | % | 568,382 | 533,038 | 7 | % | |||||||||||
Gross Profit | |||||||||||||||||||
License Gross Profit | 99 | 284 | (65 | )% | 1,657 | 561 | 195 | % | |||||||||||
License Gross Profit Margin | 34 | % | 50 | % | 65 | % | 36 | % | |||||||||||
Support and Service Gross Profit | 135,122 | 128,439 | 5 | % | 406,385 | 378,092 | 7 | % | |||||||||||
Support and Service Gross Profit Margin | 42 | % | 43 | % | 43 | % | 43 | % | |||||||||||
Hardware Gross Profit | 3,692 | 3,092 | 19 | % | 11,253 | 10,786 | 4 | % | |||||||||||
Hardware Gross Profit Margin | 28 | % | 25 | % | 30 | % | 28 | % | |||||||||||
Total Gross Profit | $ | 138,913 | $ | 131,815 | 5 | % | $ | 419,295 | $ | 389,439 | 8 | % | |||||||
Gross Profit Margin | 42 | % | 43 | % | 42 | % | 42 | % |
• | For the third quarter of fiscal 2016, the bank systems and services segment revenue increased 3% to $246.2 million with a gross margin of 39% from $238.1 million with a gross margin of 41% in the same quarter last year. The decrease in gross margin is primarily due to the decrease in deconversion fees in the current quarter compared to the prior year. The credit union systems and services segment revenue increased 21% to $87.0 million with a gross margin of 48% for the third quarter of fiscal 2016 from $71.6 million and a gross margin of 46% in the same period a year ago. |
• | Bank systems and services segment revenue for the nine month period increased 2% to $723.9 million from $709.0 million. Gross margins in each period were 40% and 41%, respectively. Credit union systems and services segment revenue increased 24% to $263.7 million with a gross margin of 49% from $213.4 million with a gross margin of 46% for the same nine months last year. |
(In Thousands) | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Selling and Marketing | $ | 22,732 | $ | 21,674 | 5 | % | $ | 66,714 | $ | 65,512 | 2 | % | |||||||
Percentage of Total Revenue | 7 | % | 7 | % | 7 | % | 7 | % | |||||||||||
Research and Development | 19,854 | 17,522 | 13 | % | 57,269 | 51,995 | 10 | % | |||||||||||
Percentage of Total Revenue | 6 | % | 6 | % | 6 | % | 6 | % | |||||||||||
General and Administrative | 16,497 | 15,417 | 7 | % | 50,157 | 43,442 | 15 | % | |||||||||||
Percentage of Total Revenue | 5 | % | 5 | % | 5 | % | 5 | % | |||||||||||
Total Operating Expenses | 59,083 | 54,613 | 8 | % | 174,140 | 160,949 | 8 | % | |||||||||||
Operating Income | $ | 79,830 | $ | 77,202 | 3 | % | $ | 245,155 | $ | 228,490 | 7 | % | |||||||
Operating Margin | 24 | % | 25 | % | 25 | % | 25 | % |
• | The general and administrative costs increase of 15% in the year-to-date period is partially due to the gain on the sale of assets for TeleWeb products reported in the prior year. Increased headcount and related personnel costs also contributed to the increase in general and administrative and research and development costs. |
(In Thousands, Except Per Share Data) | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Income Before Income Taxes | $ | 79,398 | $ | 76,566 | 4 | % | $ | 244,430 | $ | 227,335 | 8 | % | |||||||
Provision for Income Taxes | 25,515 | 25,854 | (1 | )% | 79,833 | 76,656 | 4 | % | |||||||||||
Net Income | $ | 53,883 | $ | 50,712 | 6 | % | $ | 164,597 | $ | 150,679 | 9 | % | |||||||
Diluted net income per share | $ | 0.68 | $ | 0.63 | 9 | % | $ | 2.06 | $ | 1.84 | 12 | % |
• | Provision for income taxes decreased 1% in the current third quarter compared to the same quarter in fiscal 2015 and is 32.1% of income before income taxes this quarter compared to 33.8% of income before income taxes for the same period in fiscal 2015. |
• | Provision for income taxes increased 4% for the year-to-date period, although the effective rate decreased to 32.7% of income before income taxes from 33.7% for the nine months ending March 31, 2015. |
• | At March 31, 2016, cash and cash equivalents increased to $54.0 million from $52.8 million at March 31, 2015. |
• | Trade receivables totaled $137.4 million at March 31, 2016, which was the same at March 31, 2015. |
• | Current and long term debt increased from $77.4 million a year ago to $100.2 million at March 31, 2016. |
• | Deferred revenue increased to $383.2 million at March 31, 2016, compared to $370.5 million a year ago. |
• | Stockholders' equity decreased 1% to $948.9 million at March 31, 2016, compared to $956.6 million a year ago. |
(In Thousands) | Nine Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Net income | $ | 164,597 | $ | 150,679 | |||
Depreciation | 38,106 | 41,023 | |||||
Amortization | 57,013 | 48,063 | |||||
Other non-cash expenses | 32,522 | (2,241 | ) | ||||
Change in receivables | 108,172 | 86,626 | |||||
Change in deferred revenue | (149,885 | ) | (120,941 | ) | |||
Change in other assets and liabilities | (43,492 | ) | (20,722 | ) | |||
Net cash provided by operating activities | $ | 207,033 | $ | 182,487 |
(In Thousands) | Nine Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Payment for acquisitions, net of cash acquired | $ | (8,275 | ) | $ | — | ||
Capital expenditures | (43,300 | ) | (35,867 | ) | |||
Proceeds from sale of assets | 2,797 | 8,266 | |||||
Internal use software | (10,157 | ) | (10,266 | ) | |||
Computer software developed | (74,662 | ) | (56,465 | ) | |||
Net cash from investing activities | $ | (133,597 | ) | $ | (94,332 | ) |
• | The $43.3 million in capital expenditures was mainly for the purchase of computer equipment and aircraft. |
• | $8.3 million, net of cash acquired, was used for the acquisition of Bayside Business Solutions. |
• | The prior year's $8.3 million in proceeds from the sale of assets mainly related to the TeleWeb suite of Internet and mobile banking software products. |
(In Thousands) | Nine Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Borrowings on credit facilities | $ | 100,000 | $ | 70,000 | |||
Repayments on credit facilities | (52,484 | ) | (6,033 | ) | |||
Debt acquisition costs | — | (901 | ) | ||||
Purchase of treasury stock | (155,122 | ) | (112,803 | ) | |||
Dividends paid | (62,037 | ) | (56,183 | ) | |||
Net cash from issuance of stock and tax related to stock-based compensation | 1,895 | 188 | |||||
Net cash from financing activities | $ | (167,748 | ) | $ | (105,732 | ) |
Condensed Consolidated Statements of Income (Unaudited) | |||||||||||||||||||||
(In Thousands, Except Per Share Data) | Three Months Ended March 31, | % Change | Nine Months Ended March 31, | % Change | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
REVENUE | |||||||||||||||||||||
License | $ | 292 | $ | 569 | (49 | )% | $ | 2,530 | $ | 1,563 | 62 | % | |||||||||
Support and service | 319,649 | 296,896 | 8 | % | 947,615 | 882,017 | 7 | % | |||||||||||||
Hardware | 13,245 | 12,244 | 8 | % | 37,532 | 38,897 | (4 | )% | |||||||||||||
Total | 333,186 | 309,709 | 8 | % | 987,677 | 922,477 | 7 | % | |||||||||||||
COST OF SALES | |||||||||||||||||||||
Cost of license | 193 | 285 | (32 | )% | 873 | 1,002 | (13 | )% | |||||||||||||
Cost of support and service | 184,527 | 168,457 | 10 | % | 541,230 | 503,925 | 7 | % | |||||||||||||
Cost of hardware | 9,553 | 9,152 | 4 | % | 26,279 | 28,111 | (7 | )% | |||||||||||||
Total | 194,273 | 177,894 | 9 | % | 568,382 | 533,038 | 7 | % | |||||||||||||
GROSS PROFIT | 138,913 | 131,815 | 5 | % | 419,295 | 389,439 | 8 | % | |||||||||||||
Gross Profit Margin | 42 | % | 43 | % | 42 | % | 42 | % | |||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||
Selling and marketing | 22,732 | 21,674 | 5 | % | 66,714 | 65,512 | 2 | % | |||||||||||||
Research and development | 19,854 | 17,522 | 13 | % | 57,269 | 51,995 | 10 | % | |||||||||||||
General and administrative | 16,497 | 15,417 | 7 | % | 50,157 | 43,442 | 15 | % | |||||||||||||
Total | 59,083 | 54,613 | 8 | % | 174,140 | 160,949 | 8 | % | |||||||||||||
OPERATING INCOME | 79,830 | 77,202 | 3 | % | 245,155 | 228,490 | 7 | % | |||||||||||||
INTEREST INCOME (EXPENSE) | |||||||||||||||||||||
Interest income | 54 | 33 | 64 | % | 258 | 118 | 119 | % | |||||||||||||
Interest expense | (486 | ) | (669 | ) | (27 | )% | (983 | ) | (1,273 | ) | (23 | )% | |||||||||
Total | (432 | ) | (636 | ) | (32 | )% | (725 | ) | (1,155 | ) | (37 | )% | |||||||||
INCOME BEFORE INCOME TAXES | 79,398 | 76,566 | 4 | % | 244,430 | 227,335 | 8 | % | |||||||||||||
PROVISION FOR INCOME TAXES | 25,515 | 25,854 | (1 | )% | 79,833 | 76,656 | 4 | % | |||||||||||||
NET INCOME | $ | 53,883 | $ | 50,712 | 6 | % | $ | 164,597 | $ | 150,679 | 9 | % | |||||||||
Diluted net income per share | $ | 0.68 | $ | 0.63 | $ | 2.06 | $ | 1.84 | |||||||||||||
Diluted weighted average shares outstanding | 79,167 | 81,094 | 79,891 | 81,773 | |||||||||||||||||
Consolidated Balance Sheet Highlights (Unaudited) | |||||||||||||||||||||
(In Thousands) | March 31, | % Change | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Cash and cash equivalents | $ | 54,001 | $ | 52,800 | 2 | % | |||||||||||||||
Receivables | 137,406 | 137,415 | — | % | |||||||||||||||||
Total assets | 1,702,622 | 1,618,139 | 5 | % | |||||||||||||||||
Accounts payable and accrued expenses | $ | 76,781 | $ | 71,502 | 7 | % | |||||||||||||||
Current and long term debt | 100,213 | 77,447 | 29 | % | |||||||||||||||||
Deferred revenue | 383,171 | 370,470 | 3 | % | |||||||||||||||||
Stockholders' Equity | 948,867 | 956,610 | (1 | )% |