Delaware | 0-14112 | 43-1128385 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
JACK HENRY & ASSOCIATES, INC. | |||
(Registrant) | |||
Date: | August 16, 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 (Unaudited) | |||||||||||||||||||
(In Thousands) | Three Months Ended June 30, | % Change | Year Ended June 30, | % Change | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Revenue | |||||||||||||||||||
License | $ | 511 | $ | 1,072 | (52 | )% | $ | 3,041 | $ | 2,635 | 15 | % | |||||||
Percentage of Total Revenue | <1% | <1% | <1% | <1% | |||||||||||||||
Support and Service | 353,364 | 318,635 | 11 | % | 1,300,978 | 1,200,652 | 8 | % | |||||||||||
Percentage of Total Revenue | 96 | % | 95 | % | 96 | % | 96 | % | |||||||||||
Hardware | 13,095 | 14,006 | (7 | )% | 50,627 | 52,903 | (4 | )% | |||||||||||
Percentage of Total Revenue | 4 | % | 4 | % | 4 | % | 4 | % | |||||||||||
Total Revenue | 366,970 | 333,713 | 10 | % | 1,354,646 | 1,256,190 | 8 | % | |||||||||||
Cost of Sales | |||||||||||||||||||
Cost of License | 325 | 185 | 76 | % | 1,197 | 1,187 | 1 | % | |||||||||||
Cost of Support and Service | 195,878 | 176,826 | 11 | % | 737,108 | 680,750 | 8 | % | |||||||||||
Cost of Hardware | 9,067 | 10,288 | (12 | )% | 35,346 | 38,399 | (8 | )% | |||||||||||
Total Cost of Sales | 205,270 | 187,299 | 10 | % | 773,651 | 720,336 | 7 | % | |||||||||||
Gross Profit | |||||||||||||||||||
License Gross Profit | 186 | 887 | (79 | )% | 1,844 | 1,448 | 27 | % | |||||||||||
License Gross Profit Margin | 36 | % | 83 | % | 61 | % | 55 | % | |||||||||||
Support and Service Gross Profit | 157,486 | 141,809 | 11 | % | 563,870 | 519,902 | 8 | % | |||||||||||
Support and Service Gross Profit Margin | 45 | % | 45 | % | 43 | % | 43 | % | |||||||||||
Hardware Gross Profit | 4,028 | 3,718 | 8 | % | 15,281 | 14,504 | 5 | % | |||||||||||
Hardware Gross Profit Margin | 31 | % | 27 | % | 30 | % | 27 | % | |||||||||||
Total Gross Profit | $ | 161,700 | $ | 146,414 | 10 | % | $ | 580,995 | $ | 535,854 | 8 | % | |||||||
Gross Profit Margin | 44 | % | 44 | % | 43 | % | 43 | % |
• | For the fourth quarter of fiscal 2016, the bank systems and services segment revenue increased 8% to $272.7 million with a gross margin of 43% from $253.7 million with a gross margin of 43% in the same quarter last year. The credit union systems |
• | Bank systems and services segment revenue for fiscal 2016 increased 4% to $996.7 million from $962.7 million a year ago. Gross margins in each period were 41% and 42%, respectively. Credit union systems and services segment revenue increased 22% to $358.0 million with a gross margin of 48% from $293.5 million with a gross margin of 46% last fiscal year. |
(Unaudited, In Thousands) | Three Months Ended June 30, | % Change | Year Ended June 30, | % Change | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Selling and Marketing | $ | 23,365 | $ | 23,492 | (1 | )% | $ | 90,079 | $ | 89,004 | 1 | % | |||||||
Percentage of Total Revenue | 6 | % | 7 | % | 7 | % | 7 | % | |||||||||||
Research and Development | 23,964 | 19,501 | 23 | % | 81,234 | 71,495 | 14 | % | |||||||||||
Percentage of Total Revenue | 7 | % | 6 | % | 6 | % | 6 | % | |||||||||||
General and Administrative | 17,357 | 14,049 | 24 | % | 67,514 | 64,364 | 5 | % | |||||||||||
Percentage of Total Revenue | 5 | % | 4 | % | 5 | % | 5 | % | |||||||||||
Gain on disposal of a business | (19,491 | ) | — | — | % | (19,491 | ) | (6,874 | ) | 184 | % | ||||||||
Total Operating Expenses | 45,195 | 57,042 | (21 | )% | 219,336 | 217,989 | 1 | % | |||||||||||
Operating Income | $ | 116,505 | $ | 89,372 | 30 | % | $ | 361,659 | $ | 317,865 | 14 | % | |||||||
Operating Margin | 32 | % | 27 | % | 27 | % | 25 | % |
• | The increase in research and development costs was mostly due to increased headcount and related personnel costs. Disposals of assets during the fourth quarter also contributed to the increase. |
• | In fiscal 2016, the Company sold its Alogent business, resulting in a gain totaling $19,491. Alogent contributed revenue of $28,422 and $27,206 in fiscal years 2016 and 2015, respectively. |
• | In fiscal 2015, we had a gain totaling $6,874 due to the sale of the TeleWeb™ suite of Internet and mobile banking software products. The fiscal 2015 gain was previously included in general and administrative expense. |
(Unaudited, In Thousands, Except Per Share Data) | Three Months Ended June 30, | % Change | Year Ended June 30, | % Change | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Income Before Income Taxes | $ | 116,106 | $ | 89,101 | 30 | % | $ | 360,536 | $ | 316,440 | 14 | % | |||||||
Provision for Income Taxes | 31,836 | 28,562 | 11 | % | 111,669 | 105,219 | 6 | % | |||||||||||
Net Income | $ | 84,270 | $ | 60,539 | 39 | % | $ | 248,867 | $ | 211,221 | 18 | % | |||||||
Diluted net income per share | $ | 1.06 | $ | 0.75 | 42 | % | $ | 3.12 | $ | 2.59 | 21 | % |
• | Provision for income taxes increased 11% in the fourth quarter compared to the same quarter in fiscal 2015, but was 27.4% of income before income taxes this quarter compared to 32.1% of income before income taxes for the same period in fiscal 2015. The drop in effective tax rate for the quarter was due primarily to a significant difference in the book versus tax basis in Alogent stock sold in the fourth quarter of fiscal 2016. |
• | Provision for income taxes increased 6% for fiscal 2016, although the effective rate decreased to 31.0% of income before income taxes from 33.3% for the twelve months ending June 30, 2015. The decrease in the effective tax rate was primarily due to the sale of subsidiary stock, as well as the retroactive extension of the Research and Experimentation Credit ("R&E Credit") to January 1, 2015 during fiscal 2016. |
• | At June 30, 2016, cash and cash equivalents decreased to $70.3 million from $148.3 million at June 30, 2015. |
• | Trade receivables totaled $253.9 million at June 30, 2016, an increase from $245.4 million at June 30, 2015. |
• | Current and long term debt decreased from $52.7 million a year ago to $0.2 million at June 30, 2016. |
• | Current deferred revenue increased to $343.5 million at June 30, 2016, compared to $339.5 million a year ago. |
• | Stockholders' equity increased to $996.2 million at June 30, 2016, compared to $991.5 million a year ago. |
(Unaudited, In Thousands) | Year Ended June 30, | ||||||
2016 | 2015 | ||||||
Net income | $ | 248,867 | $ | 211,221 | |||
Depreciation | 50,571 | 54,155 | |||||
Amortization | 79,077 | 64,841 | |||||
Other non-cash expenses | 30,050 | 30,166 | |||||
Change in receivables | (13,735 | ) | (21,346 | ) | |||
Change in deferred revenue | 4,364 | 40,565 | |||||
Change in other assets and liabilities | (34,078 | ) | (5,812 | ) | |||
Net cash provided by operating activities | $ | 365,116 | $ | 373,790 |
(Unaudited, In Thousands) | Year Ended June 30, | ||||||
2016 | 2015 | ||||||
Payment for acquisitions, net of cash acquired | $ | (8,275 | ) | $ | — | ||
Capital expenditures | (56,325 | ) | (54,409 | ) | |||
Proceeds from the sale of businesses | 34,030 | 8,135 | |||||
Proceeds from the sale of assets | 2,844 | 182 | |||||
Internal use software | (11,826 | ) | (14,020 | ) | |||
Computer software developed | (96,411 | ) | (76,872 | ) | |||
Net cash from investing activities | $ | (135,963 | ) | $ | (136,984 | ) |
• | $8.3 million, net of cash acquired, was used for the acquisition of Bayside Business Solutions. |
• | The $56.3 million in capital expenditures was mainly for the purchase of computer equipment and aircraft. |
• | The $34.0 million of proceeds from the sale of businesses was related to the sale of Alogent. The prior year's $8.1 million in proceeds related to the sale of the TeleWeb™ suite of Internet and mobile banking software products. |
(Unaudited, In Thousands) | Year Ended June 30, | ||||||
2016 | 2015 | ||||||
Borrowings on credit facilities | $ | 100,000 | $ | 90,000 | |||
Repayments on credit facilities | (152,500 | ) | (50,783 | ) | |||
Debt acquisition costs | — | (901 | ) | ||||
Purchase of treasury stock | (175,662 | ) | (122,691 | ) | |||
Dividends paid | (84,118 | ) | (76,410 | ) | |||
Net cash from issuance of stock and tax related to stock-based compensation | 5,124 | 1,915 | |||||
Net cash from financing activities | $ | (307,156 | ) | $ | (158,870 | ) |
Condensed Consolidated Statements of Income (Unaudited) | |||||||||||||||||||||
(In Thousands, Except Per Share Data) | Three Months Ended June 30, | % Change | Year Ended June 30, | % Change | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
REVENUE | |||||||||||||||||||||
License | $ | 511 | $ | 1,072 | (52 | )% | $ | 3,041 | $ | 2,635 | 15 | % | |||||||||
Support and service | 353,364 | 318,635 | 11 | % | 1,300,978 | 1,200,652 | 8 | % | |||||||||||||
Hardware | 13,095 | 14,006 | (7 | )% | 50,627 | 52,903 | (4 | )% | |||||||||||||
Total | 366,970 | 333,713 | 10 | % | 1,354,646 | 1,256,190 | 8 | % | |||||||||||||
COST OF SALES | |||||||||||||||||||||
Cost of license | 325 | 185 | 76 | % | 1,197 | 1,187 | 1 | % | |||||||||||||
Cost of support and service | 195,878 | 176,826 | 11 | % | 737,108 | 680,750 | 8 | % | |||||||||||||
Cost of hardware | 9,067 | 10,288 | (12 | )% | 35,346 | 38,399 | (8 | )% | |||||||||||||
Total | 205,270 | 187,299 | 10 | % | 773,651 | 720,336 | 7 | % | |||||||||||||
GROSS PROFIT | 161,700 | 146,414 | 10 | % | 580,995 | 535,854 | 8 | % | |||||||||||||
Gross Profit Margin | 44 | % | 44 | % | 43 | % | 43 | % | |||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||
Selling and marketing | 23,365 | 23,492 | (1 | )% | 90,079 | 89,004 | 1 | % | |||||||||||||
Research and development | 23,964 | 19,501 | 23 | % | 81,234 | 71,495 | 14 | % | |||||||||||||
General and administrative | 17,357 | 14,049 | 24 | % | 67,514 | 64,364 | 5 | % | |||||||||||||
Gain on disposal of a business | (19,491 | ) | — | — | % | (19,491 | ) | (6,874 | ) | 184 | % | ||||||||||
Total | 45,195 | 57,042 | (21 | )% | 219,336 | 217,989 | 1 | % | |||||||||||||
OPERATING INCOME | 116,505 | 89,372 | 30 | % | 361,659 | 317,865 | 14 | % | |||||||||||||
INTEREST INCOME (EXPENSE) | |||||||||||||||||||||
Interest income | 49 | 51 | (4 | )% | 307 | 169 | 82 | % | |||||||||||||
Interest expense | (448 | ) | (322 | ) | 39 | % | (1,430 | ) | (1,594 | ) | (10 | )% | |||||||||
Total | (399 | ) | (271 | ) | 47 | % | (1,123 | ) | (1,425 | ) | (21 | )% | |||||||||
INCOME BEFORE INCOME TAXES | 116,106 | 89,101 | 30 | % | 360,536 | 316,440 | 14 | % | |||||||||||||
PROVISION FOR INCOME TAXES | 31,836 | 28,562 | 11 | % | 111,669 | 105,219 | 6 | % | |||||||||||||
NET INCOME | $ | 84,270 | $ | 60,539 | 39 | % | $ | 248,867 | $ | 211,221 | 18 | % | |||||||||
Diluted net income per share | $ | 1.06 | $ | 0.75 | $ | 3.12 | $ | 2.59 | |||||||||||||
Diluted weighted average shares outstanding | 79,261 | 81,086 | 79,734 | 81,601 | |||||||||||||||||
Consolidated Balance Sheet Highlights (Unaudited) | |||||||||||||||||||||
(In Thousands) | June 30, | % Change | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Cash and cash equivalents | $ | 70,310 | $ | 148,313 | (53 | )% | |||||||||||||||
Receivables | 253,923 | 245,387 | 3 | % | |||||||||||||||||
Total assets | 1,815,512 | 1,836,835 | (1 | )% | |||||||||||||||||
Accounts payable and accrued expenses | $ | 100,007 | $ | 88,895 | 13 | % | |||||||||||||||
Current and long term debt | 200 | 52,697 | (100 | )% | |||||||||||||||||
Deferred revenue | 521,054 | 531,987 | (2 | )% | |||||||||||||||||
Stockholders' Equity | 996,210 | 991,534 | — | % |