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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2017
JACK HENRY & ASSOCIATES, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
0-14112
43-1128385
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

663 Highway 60, P.O. Box 807, Monett, MO 65708
(Address of Principle Executive Offices) (Zip Code)

417-235-6652
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]






Item 2.02
Results of Operations and Financial Condition.
On November 7, 2017, Jack Henry & Associates, Inc. issued a press release announcing fiscal 2018 first quarter results, the text of which is attached hereto as Exhibit 99.1.

Item 9.01
Financial Statements and Exhibits.
(d)    Exhibits    
    99.1 Press release dated November 7, 2017.





SIGNATURES
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.
 
 
 
JACK HENRY & ASSOCIATES, INC.
 
 
 
(Registrant)
 
 
 
 
Date:
November 7, 2017
 
/s/ Kevin D. Williams
 
 
 
Kevin D. Williams
 
 
 
Chief Financial Officer and Treasurer



Exhibit
JKHY First Quarter Fiscal 2018 Revenue Increases 4%
November 7, 2017


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

FOR IMMEDIATE RELEASE

JACK HENRY & ASSOCIATES ENDS FIRST QUARTER
FISCAL 2018 WITH 4% INCREASE IN REVENUE

Monett, MO, November 7, 2017 - Jack Henry & Associates, Inc. (NASDAQ: JKHY), a leading provider of technology solutions and payment processing services primarily for the financial services industry, today announced first quarter fiscal 2018 results.
Revenue for the quarter ended September 30, 2017 increased to $359.9 million, a 4% improvement over the first quarter of fiscal 2017. Operating income increased 1% to $92.3 million. Net income increased 2% over the first quarter of fiscal 2017 to $63.4 million, or $0.82 per diluted share.
According to David Foss, President and CEO, “We begin FY'18 with another quarter of record revenue and earnings. Our combined sales team ended ahead of their sales plan for the first quarter, which is a good indicator regarding the state of our business when you consider the strong sales quarter we experienced in Q4 FY'17. During the quarter, we delivered the first live implementations for two of our key new solutions with Treasury Management and Enterprise Risk Mitigation. We also conducted two extremely successful client education conferences in the last two months. In September we hosted our Symitar conference, and last month we hosted our first ever Jack Henry Annual Conference ("JAC"), which combined our previous Jack Henry Banking and ProfitStars education conferences. We saw record attendance by existing customers and over forty new core prospects attending between the two conferences."
Operating Results
Revenue, cost of sales, and gross profit results for the quarter and year ended September 30, 2017 were as follows:
Revenue (Unaudited)
 
 
 
 
(In Thousands)
Three Months Ended
September 30,
% Change
 
2017

 
2016

 
Revenue
 
 
 
 
Services & Support
$
224,295

 
$
217,490

3
%
Percentage of Total Revenue
62
%
 
63
%
 
Processing
135,639

 
127,538

6
%
Percentage of Total Revenue
38
%
 
37
%
 
Total Revenue
359,934

 
345,028

4
%
•
Deconversion fees in the first quarter of fiscal 2018 decreased $5.8 million compared to the first quarter of the prior year. Excluding deconversion fees from both periods, revenue increased 6%.
•
For the first quarter of fiscal 2018, core segment revenue increased 10% to $128.9 million in the first quarter of fiscal 2018 from $116.9 million in the same period a year ago. Payments segment revenue increased 1% to $123.2 million, from $122.3 million in the same quarter last year. Revenue from the complementary segment increased 3% to $93.8 million in the first quarter of fiscal 2018 from $90.9 million in the same period of fiscal 2017. Revenue in the corporate and other segment decreased 5% to $14.1 million, compared to $14.9 million for the first quarter of fiscal 2017.

Page 1
JKHY First Quarter Fiscal 2018 Revenue Increases 4%
November 7, 2017


Operating Expenses and Operating Income
Operating income increased 1% to $92.3 million, or 26% of first quarter fiscal 2018 revenue, compared to $91.4 million, or 26% of revenue in the first quarter of fiscal 2017.
(Unaudited, In Thousands)
Three Months Ended
September 30,
% Change
 
2017

 
2016

 
Cost of Revenue
$
204,715

 
$
194,763

5
%
Percentage of Total Revenue
57
%
 
56
%
 
Research and Development
20,929

 
19,739

6
%
Percentage of Total Revenue
6
%
 
6
%
 
Selling, General, & Administrative
43,733

 
39,109

12
%
Percentage of Total Revenue
12
%
 
11
%
 
Gain on disposal of a business
(1,705
)
 
—

—
%
Total Operating Expenses
267,672

 
253,611

6
%
Operating Income
$
92,262

 
$
91,417

1
%
Operating Margin
26
%
 
26
%
 
•
Cost of revenue increased 5% for the first quarter of fiscal 2018 compared to the first quarter of fiscal 2017 due primarily to increased salaries and amortization of capitalized software.
•
Research and development expense increased for the first quarter mainly due to increased salary and personnel costs, but these costs remained consistent with the prior year as a percentage of total revenue.
•
Selling, general, and administrative expenses for the first quarter of fiscal 2018 increased 12% over the prior year due mainly to increased commission expense, salaries, and personnel costs
•
In the first quarter of fiscal 2018, we sold our jhaDirect product line to Kristopher James Company, resulting in a gain of $1.7 million.
Net Income
First quarter net income increased 2% to $63.4 million, or $0.82 per diluted share, compared to $62.2 million, or $0.79 per diluted share, in the first quarter of fiscal 2017.
(Unaudited, In Thousands,
Except Per Share Data)
Three Months Ended
September 30,
% Change
 
2017

 
2016

 
Income Before Income Taxes
$
92,220

 
$
91,383

1
 %
Provision for Income Taxes
28,809

 
29,139

(1
)%
Net Income
$
63,411

 
$
62,244

2
 %
Diluted earnings per share
$
0.82

 
$
0.79

3
 %
•
Provision for income taxes decreased in the first quarter, with an effective tax rate at 31.2% of income before income taxes, compared to 31.9% for the same quarter of the prior year.

Page 2
JKHY First Quarter Fiscal 2018 Revenue Increases 4%
November 7, 2017


Effects of Deconversion Fees
The table below shows our results for the first quarter excluding the impact of deconversion fees from each year.
 
Three Months Ended September 30, 2017
 
Three Months Ended September 30, 2016
 
 
 
As Reported
Early Term Fees
ProForma
 
As Reported
Early Term Fees
ProForma
Change
% Change
Revenue
$
359,934

$
7,263

$
352,671

 
$
345,028

$
13,052

$
331,976

$
20,695

6
%
Operating Income
92,262

7,170

85,092

 
91,417

13,045

78,372

6,720

9
%
Income Before Income Taxes
92,220

7,170

85,050

 
91,383

13,045

78,338

6,712

9
%
Provision for Income Taxes
28,809

2,581

26,228

 
29,139

4,696

24,443

1,785

7
%
Net Income
$
63,411

$
4,589

$
58,822

 
$
62,244

$
8,349

$
53,895

$
4,927

9
%
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.82

$
0.06

$
0.76

 
$
0.79

$
0.11

$
0.68

$
0.08

12
%
Diluted weighted average shares outstanding
77,646

77,646

77,646

 
78,844

78,844

78,844

 
 
According to Kevin Williams, CFO, "The decrease in early term fees is in line with the guidance we previously provided. By excluding these term fees from both periods, our operating income from true operations grew by 9%. Also, excluding the early term fees from both periods in our reported segments, then revenue growth was core 12%, payments 4%, complementary 4%, and no impact on corporate and other."

Balance Sheet and Cash Flow Review
•
At September 30, 2017, cash and cash equivalents increased to $104.0 million from $84.5 million at September 30, 2016.
•
Trade receivables totaled $172.5 million at September 30, 2017 compared to $148.4 million at September 30, 2016.
•
The company had no debt at September 30, 2017 or September 30, 2016.
•
Total deferred revenue decreased to $439.6 million at September 30, 2017, compared to $469.9 million a year ago.
•
Stockholders' equity increased to $1,037.8 million at September 30, 2017, compared to $972.6 million a year ago.
Cash provided by operations totaled $138.7 million in fiscal 2018 compared to $133.4 million last year. The following table summarizes net cash (in thousands) from operating activities:
(Unaudited, In Thousands)
Three Months Ended September 30,
 
2017
 
2016
Net income
$
63,411

 
$
62,244

Depreciation
12,419

 
12,390

Amortization
23,856

 
21,746

Other non-cash expenses
1,252

 
9,174

Change in receivables
105,243

 
105,495

Change in deferred revenue
(72,074
)
 
(51,186
)
Change in other assets and liabilities
4,615

 
(26,492
)
Net cash provided by operating activities
$
138,722

 
$
133,371


Page 3
JKHY First Quarter Fiscal 2018 Revenue Increases 4%
November 7, 2017


Cash used in investing activities for fiscal 2018 totaled $40.3 million, compared to $31.9 million for the same period in fiscal 2017 and included the following:
(Unaudited, In Thousands)
Three Months Ended September 30,
 
2017
 
2016
Payment for acquisitions, net of cash acquired
$
(10,455
)
 
$
—

Capital expenditures
(3,708
)
 
(8,113
)
Proceeds from the sale of businesses
200

 
—

Proceeds from the sale of assets
106

 
777

Internal use software
(3,452
)
 
(4,328
)
Computer software developed
(22,976
)
 
(20,237
)
Net cash from investing activities
$
(40,285
)
 
$
(31,901
)
•
On August 31, 2017, the Company purchased Vanguard Software Group, a Florida-based company specializing in the underwriting, spreading, and online decisioning of commercial loans.
Financing activities used cash of $109.2 million in fiscal 2018 and $87.3 million in fiscal 2017.
(Unaudited, In Thousands)
Three Months Ended September 30,
 
2017
 
2016
Borrowings on credit facilities
$
—

 
$
—

Repayments on credit facilities
(50,000
)
 
(200
)
Purchase of treasury stock
(30,018
)
 
(61,338
)
Dividends paid
(23,904
)
 
(21,857
)
Net cash from issuance of stock and tax related to stock-based compensation
(5,240
)
 
(3,866
)
Net cash from financing activities
$
(109,162
)
 
$
(87,261
)

Quarterly Conference Call
The company will hold a conference call on November 8, 2017; at 7:45 a.m. Central Time and investors are invited to listen at www.jackhenry.com.
About Jack Henry & Associates
Jack Henry & Associates, Inc. (NASDAQ: JKHY) is a leading provider of technology solutions and payment processing services primarily for the financial services industry. Its solutions serve approximately 9,000 customers nationwide, and are marketed and supported through three primary brands. Jack Henry Banking® supports banks ranging from community banks to multi-billion dollar institutions with information processing solutions.  Symitar® is the leading provider of information processing solutions for credit unions of all sizes. ProfitStars® provides highly specialized products and services that enable financial institutions of every asset size and charter, and diverse corporate entities to mitigate and control risks, optimize revenue and growth opportunities, and contain costs.  Additional information is available at www.jackhenry.com.
Statements made in this news release that are not historical facts are forward-looking information. Actual results may differ materially from those projected in any forward-looking information. Specifically, there are a number of important factors that could cause actual results to differ materially from those anticipated by any forward-looking information. Additional information on these and other factors, which could affect the Company's financial results, are included in its Securities and Exchange Commission (SEC) filings on Form 10-K, and potential investors should review these statements. Finally, there may be other factors not mentioned above or included in the Company's SEC filings that may cause actual results to differ materially from any forward-looking information.


Page 4
JKHY First Quarter Fiscal 2018 Revenue Increases 4%
November 7, 2017


Condensed Consolidated Statements of Income (Unaudited)
 
 
 
 
 
(In Thousands, Except Per Share Data)
Three Months Ended September 30,
 
% Change
 
2017
 
2016
 
 
 
 
 
 
 
 
REVENUE
359,934

 
345,028

 
4
 %
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
Cost of Revenue
204,715

 
194,763

 
5
 %
Research & Development
20,929

 
19,739

 
6
 %
Selling, General, & Administrative
43,733

 
39,109

 
12
 %
Gain on disposal of businesses
(1,705
)
 
—

 
—
 %
Total Expenses
267,672

 
253,611

 
6
 %
 
 
 
 
 
 
OPERATING INCOME
92,262

 
91,417

 
1
 %
 
 
 
 
 
 
INTEREST INCOME (EXPENSE)
 
 
 
 
 
Interest income
147

 
108

 
36
 %
Interest expense
(189
)
 
(142
)
 
33
 %
Total
(42
)
 
(34
)
 
24
 %
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
92,220

 
91,383

 
1
 %
 
 
 
 
 
 
PROVISION FOR INCOME TAXES
28,809

 
29,139

 
(1
)%
 
 
 
 
 
 
NET INCOME
$
63,411

 
$
62,244

 
2
 %
 
 
 
 
 
 
Diluted net income per share
$
0.82

 
$
0.79

 
 
Diluted weighted average shares outstanding
77,646

 
78,844

 
 
 
 
 
 
 
 
Consolidated Balance Sheet Highlights (Unaudited)
 
 
 
 
 
(In Thousands)
September 30,
 
% Change
 
2017
 
2016
 
 
Cash and cash equivalents
$
104,040

 
$
84,519

 
23
 %
Receivables
172,515

 
148,428

 
16
 %
Total assets
1,796,345

 
1,732,252

 
4
 %
 
 
 
 
 
 
Accounts payable and accrued expenses
$
81,542

 
$
76,913

 
6
 %
Deferred revenue
439,565

 
469,868

 
(6
)%
Stockholders' equity
1,037,813

 
972,589

 
7
 %


Page 5