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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): February 5, 2019
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 February 5, 2019, Jack Henry & Associates, Inc. issued a press release announcing fiscal 2019 second quarter and fiscal year-to-date 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 February 5, 2019





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:
February 5, 2019
 
/s/ Kevin D. Williams
 
 
 
Kevin D. Williams
 
 
 
Chief Financial Officer and Treasurer



Exhibit
JKHY Second Quarter Fiscal 2019
February 5, 2019


Jack Henry & Associates, Inc.
 
Kevin D. Williams
Press Release
 
Chief Financial Officer
 
 
(417) 235-6652

FOR IMMEDIATE RELEASE

Jack Henry & Associates, Inc. Reports Second Quarter Fiscal 2019 Results

•
Year-to-date summary:
◦
GAAP revenue increased 8% and operating income increased 5% for the six months ended December 31, 2018.
◦
Non-GAAP revenue increased 9% and operating income increased 14% for the six months ended December 31, 2018.
◦
GAAP EPS was $1.96 and $2.94 per diluted share for the six months ended December 31, 2018 and 2017, respectively.

•
Second quarter summary:
◦
GAAP revenue increased 8% and operating income increased 4% for the quarter.
◦
Non-GAAP revenue increased 9% and operating income increased 12% for the quarter.
◦
GAAP EPS was $0.88 per diluted share for the quarter, compared to $2.08 in the prior year quarter.

Monett, MO, February 5, 2019 - Jack Henry & Associates, Inc. (NASDAQ: JKHY), a leading provider of technology solutions and payment processing services primarily for the financial services industry, today announced results for the second quarter of fiscal 2019.
The Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, and related amendments, collectively referred to as ASC Topic 606, on July 1, 2018. The prior year numbers presented below have been re-cast as part of our full retrospective adoption of the new standard.
GAAP Results for the Quarter
Revenue for the quarter ended December 31, 2018 increased to $386.3 million, an 8% improvement over the second quarter of fiscal 2018. Operating income increased 4% to $88.2 million. The Tax Cuts and Jobs Act ("TCJA") enacted December 22, 2017 resulted in a large credit to the provision for income taxes in fiscal 2018, which contributed to the large decrease in net income of 58% compared to the second quarter of fiscal 2018. Net income for the second quarter of fiscal 2019 was $68.1 million, or $0.88 per diluted share.
For the six months ended December 31, 2018, revenue increased to $778.8 million, an 8% increase compared to the six months ended December 31, 2017. Operating income increased 5% over the prior year-to-date period to $191.4 million. Net income totaled $151.6 million, or $1.96 per diluted share, a decrease of 34% compared to the six months ended December 31, 2017, again due mainly to the effects of the TCJA on the prior year period.
Non-GAAP Results for the Quarter
On an adjusted basis for the quarter ended December 31, 2018, revenue increased 9% compared to the prior year quarter to $379.4 million. Operating income increased 12% to $84.9 million.
For the six months ended December 31, 2018, non-GAAP adjusted revenue increased 9% compared to the six months ended December 31, 2018 to $764.1 million, and operating income increased 14% to $183.0 million.
According to David Foss, President and CEO, “We are pleased to report another strong quarter of revenue and operating income growth. Our sales organization had another solid quarter with all brands again exceeding quota as demand for our solutions remains high.  We contracted another thirteen new core customers during the quarter, with all of them selecting our outsourcing model.  The outstanding technology and service delivered by our teams continues to be recognized by new and existing clients.”
Operating Results
Revenue, operating expenses, operating income, and net income for the quarter and six months ended December 31, 2018, as compared to the quarter and six months ended December 31, 2017, were as follows:

Page 1
JKHY Second Quarter Fiscal 2019
February 5, 2019


Revenue (Unaudited)
 
 
 
 
 
 
 
 
 
(In Thousands)
Three Months Ended
December 31,
% Change
 
Six Months Ended
December 31,
% Change
 
2018

 
2017

 
 
2018

 
2017

 
Revenue
 
 
 
 
 
 
 
 
 
Services & Support
$
237,322

 
$
223,018

6
%
 
$
483,890

 
$
449,770

8
%
Percentage of Total Revenue
61
%
 
62
%
 
 
62
%
 
63
%
 
Processing
148,953

 
134,191

11
%
 
294,928

 
268,723

10
%
Percentage of Total Revenue
39
%
 
38
%
 
 
38
%
 
37
%
 
Total Revenue
386,275

 
357,209

8
%
 
778,818

 
718,493

8
%
•
The increased revenue in the services and support line for the second quarter of fiscal 2019 was mainly driven by growth in our 'outsourcing and cloud' revenue, partially due to the Ensenta acquisition, and increased 'in-house support' revenue. The increase in processing revenue was also partially due to Ensenta, although all components of processing revenue increased even after excluding Ensenta revenue. Deconversion fees, which are included within services and support, decreased $3.1 million compared to the second quarter of the prior year. Excluding deconversion fees from both periods, and revenue from fiscal 2019 acquisitions, total revenue increased 9% for the second quarter of fiscal 2019 compared to the same quarter of fiscal 2018.
•
For the six months ended December 31, 2018, deconversion fees decreased $6.0 million compared to the prior year-to-date period. Excluding deconversion fees from both periods and revenue from fiscal 2019 acquisitions, total revenue increased 9%. All components of processing revenue increased. The increase in Services & Support was primarily driven by increased 'outsourcing and cloud' revenue, partially due to Ensenta, as well as increased 'in-house support' revenue, primarily from higher software usage revenue resulting partially from the addition of new customers.
•
For the second quarter of fiscal 2019, core segment revenue increased 5% to $129.7 million from $123.3 million in the same period a year ago. Payments segment revenue increased 14% to $138.0 million, from $121.4 million in the same quarter last year. Revenue from the complementary segment increased 7% to $103.3 million in the second quarter of fiscal 2019 from $96.7 million in the same period of fiscal 2018. Revenue in the corporate and other segment decreased 4% to $15.3 million, compared to $15.9 million for the second quarter of fiscal 2018.
•
For the six months ended December 31, 2018, revenue in the core segment increased 7% to $267.3 million, compared to $250.6 million a year ago. Payments segment revenue increased 11% to $272.2 million, from $244.3 million for the first six months of fiscal 2018. Complementary segment revenue increased 10% to $210.6 million, up from $191.7 million a year ago. Revenue from the corporate and other segment decreased 10% to $28.8 million for the six months ended December 31, 2018 from $31.9 million for the six months ended December 31, 2017.
Operating Expenses and Operating Income
(Unaudited, In Thousands)
Three Months Ended
December 31,
% Change
 
Six Months Ended
December 31,
% Change
 
2018

 
2017

 
 
2018

 
2017

 
Cost of Revenue
$
227,284

 
$
207,100

10
 %
 
$
447,396

 
$
411,016

9
 %
Percentage of Total Revenue
59
%
 
58
%
 
 
57
%
 
57
%
 
Research and Development
23,990

 
22,414

7
 %
 
48,016

 
43,343

11
 %
Percentage of Total Revenue
6
%
 
6
%
 
 
6
%
 
6
%
 
Selling, General, & Administrative
46,797

 
43,094

9
 %
 
91,979

 
84,181

9
 %
Percentage of Total Revenue
12
%
 
12
%
 
 
12
%
 
12
%
 
Gain on disposal of a business
—

 
(189
)
(100
)%
 
—

 
(1,894
)
(100
)%
Total Operating Expenses
298,071

 
272,419

9
 %
 
587,391

 
536,646

9
 %
Operating Income
$
88,204

 
$
84,790

4
 %
 
$
191,427

 
$
181,847

5
 %
Operating Margin
23
%
 
24
%
 
 
25
%
 
25
%
 
•
Cost of revenue increased 10% for the second quarter of fiscal 2019 compared to the second quarter of fiscal 2018 and increased 1% as a percentage of revenue. The increased costs were primarily due to increased headcount driving increased salaries and benefits; higher direct costs of product, including spending related to our ongoing project to expand our credit and debit card platform; and increased amortization expense. Excluding costs related to deconversions and bonuses provided by the Company in response to the lower tax rate resulting from the TCJA, cost of revenue increased 9%.

Page 2
JKHY Second Quarter Fiscal 2019
February 5, 2019


•
For the six months ended December 31, 2018, cost of revenue increased 9% compared to the equivalent period of the prior year but remained a consistent percentage of revenue. The increased costs were primarily due to the same factors discussed above. Excluding costs related to deconversions and bonuses provided by the Company in response to the lower tax rate resulting from the TCJA, cost of revenue increased 8%.
•
Research and development expense increased for both the second quarter and year-to-date period mainly due to increased salary and personnel costs resulting from increased headcount and the acquisition of Ensenta, but remained consistent with the prior year second quarter and year-to-date period as a percentage of total revenue.
•
Selling, general, and administrative expenses for both the second quarter and year-to-date period of fiscal 2019 increased mainly due to increased commissions, salaries, and benefits. Selling, general, and administrative expense remained a consistent percentage of revenue in both the quarter and fiscal year-to-date periods.
•
There were no sales of businesses in fiscal 2019. For the first six months of fiscal 2018, gains on disposals of businesses totaled $1.9 million, due to the ATM Manager gain of $0.2 million in the second quarter, and the first quarter sale of our jhaDirect product line.
•
For the second quarter of fiscal 2019, operating income increased 4% to $88.2 million, or 23% of revenue, compared to $84.8 million, or 24% of revenue in the second quarter of fiscal 2018. For the year-to-date period, operating income increased 5% to $191.4 million, or 25% of revenue, compared to operating income of $181.8 million, also 25% of revenue, for the six months ended December 31, 2017.
Net Income
Net income for the second quarter ended December 31, 2018 was significantly impacted in the prior year by the TCJA and the related re-measurement of net deferred tax liabilities.
(Unaudited, In Thousands,
Except Per Share Data)
Three Months Ended
December 31,
% Change
 
Six Months Ended
December 31,
% Change
 
2018

 
2017

 
 
2018

 
2017

 
Income Before Income Taxes
$
88,308

 
$
84,686

4
 %
 
$
191,674

 
$
181,701

5
 %
Provision for Income Taxes
20,219

 
(76,557
)
(126
)%
 
40,034

 
(46,412
)
(186
)%
Net Income
$
68,089

 
$
161,243

(58
)%
 
$
151,640

 
$
228,113

(34
)%
Diluted earnings per share
$
0.88

 
$
2.08

(58
)%
 
$
1.96

 
$
2.94

(33
)%
•
Provision for income taxes increased in the second quarter, with an effective tax rate at 22.9% of income before income taxes, compared to (90.4)% for the same quarter of the prior year. For the six months ended December 31, 2018, provision for income taxes increased, with an effective tax rate at 20.9% of income before income taxes, compared to (25.5)% for the same period last year. The increase in the effective tax rate was primarily the result of the TCJA enacted in the prior fiscal year on December 22, 2017, and the related re-measurement of net deferred tax liabilities. The increase is partially offset by the reduced U.S. federal corporate tax rate of 21% effective for the current fiscal year and increased excess tax benefits recognized during fiscal 2019.
According to Kevin Williams, CFO, “Our operating margins are showing the headwinds created by the double costs related to the migration of our new electronic payments platform and the new pay for performance bonus program that we rolled out at the beginning of the year which is utilizing a portion of the savings from the TCJA. Deconversion fees were down again this quarter and year-to-date compared to last year, which is a positive for us as we keep our customers, but it creates a tough comp on a GAAP basis, which is why we think it is important to show operations excluding this impact on a Non-GAAP basis. It appears that deconversion fees will be down significantly for the entire fiscal year compared to last year.”

Page 3
JKHY Second Quarter Fiscal 2019
February 5, 2019


Non-GAAP Impact of Effects of Deconversion Fees, Acquisitions, Gains on Divestitures, and New Bonus Program
The table below shows our revenue and operating income (in thousands) for the second quarter and six months ended December 31, 2018 compared to the prior year periods, excluding the impacts of deconversion fees, fiscal 2019 acquisitions, gain on divestitures, and expenses related to a bonus program enacted by the Company in fiscal 2019 in response to the TCJA.
(Unaudited, In Thousands)
Three Months Ended December 31,
 
% Change
 
Six Months Ended December 31,
 
% Change
 
2018
 
2017
 
 
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported Revenue (GAAP)
$
386,275

 
$
357,209

 
8
%
 
$
778,818

 
$
718,493

 
8
%
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Deconversion fees
(6,611
)
 
(9,722
)
 
 
 
(14,494
)
 
(20,487
)
 
 
Revenue from fiscal 2019 acquisitions
(228
)
 
—

 
 
 
(228
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Revenue
$
379,436

 
$
347,487

 
9
%
 
$
764,096

 
$
698,006

 
9
%
 
 
 
 
 
 
 
 
 
 
 
 
Reported Operating Income (GAAP)
$
88,204

 
$
84,790

 
4
%
 
$
191,427

 
$
181,847

 
5
%
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Deconversion fees
(6,342
)
 
(8,998
)
 
 
 
(14,026
)
 
(19,670
)
 
 
Operating (income)/ loss from fiscal 2019 acquisitions
475

 
—

 
 
 
475

 
—

 
 
Bonus Program
2,550

 
—

 
 
 
5,118

 
—

 
 
Gain on disposal of businesses
—

 
(189
)
 
 
 
—

 
(1,894
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Operating Income
$
84,887

 
$
75,603

 
12
%
 
$
182,994

 
$
160,283

 
14
%

The tables below show the segment break-out of revenue and cost of revenue for each period presented, as adjusted for the items above, and includes a reconciliation to the non-GAAP operating income presented above.
(Unaudited, In Thousands)
Three Months Ended December 31, 2018
 
Core
 
Payments
 
Complementary
 
Corporate & Other
 
Total
Revenue
129,729

 
138,019

 
103,250

 
15,277

 
386,275

Deconversion Fees
(2,744
)
 
(2,274
)
 
(1,587
)
 
(6
)
 
(6,611
)
Revenue from fiscal 2019 acquisitions
(190
)
 
—

 
(36
)
 
(2
)
 
(228
)
Non-GAAP Revenue
126,795

 
135,745

 
101,627

 
15,269

 
379,436

 
 
 
 
 
 
 
 
 
 
Cost of Revenue
60,288

 
65,100

 
44,167

 
57,729

 
227,284

Non-GAAP Adjustments
(359
)
 
(31
)
 
(333
)
 
(1,826
)
 
(2,549
)
Non-GAAP Cost of Revenue
59,929

 
65,069

 
43,834

 
55,903

 
224,735

Non- GAAP Segment Income
66,866

 
70,676

 
57,793

 
(40,634
)
 

 
 
 
 
 
 
 
 
 
 
Research & Development
 
 
 
 
 
 
 
 
23,990

Selling, General, & Administrative
 
 
 
 
 
 
 
 
46,797

Other Non-GAAP Adjustments
 
 
 
 
 
 
 
 
(973
)
Non-GAAP Total Operating Expenses
 
 
 
 
 
 
 
 
294,549

Non-GAAP Operating Income
 
 
 
 
 
 
 
 
84,887


Page 4
JKHY Second Quarter Fiscal 2019
February 5, 2019


(Unaudited, In Thousands)
Three Months Ended December 31, 2017
 
Core
 
Payments
 
Complementary
 
Corporate & Other
 
Total
Revenue
123,296

 
121,380

 
96,656

 
15,877

 
357,209

Deconversion Fees
(4,171
)
 
(1,698
)
 
(3,750
)
 
(103
)
 
(9,722
)
Non-GAAP Revenue
119,125

 
119,682

 
92,906

 
15,774

 
347,487

 
 
 
 
 
 
 
 
 
 
Cost of Revenue
55,364

 
59,304

 
40,209

 
52,223

 
207,100

Non-GAAP Adjustments
—

 
(4
)
 
—

 
(720
)
 
(724
)
Non-GAAP Cost of Revenue
55,364

 
59,300

 
40,209

 
51,503

 
206,376

Non- GAAP Segment Income
63,761

 
60,382

 
52,697

 
(35,729
)
 
 
 
 
 
 
 
 
 
 
 
 
Research & Development
 
 
 
 
 
 
 
 
22,414

Selling, General, & Administrative
 
 
 
 
 
 
 
 
43,094

Non-GAAP Total Operating Expenses
 
 
 
 
 
 
 
 
271,884

Non-GAAP Operating Income
 
 
 
 
 
 
 
 
75,603


(Unaudited, In Thousands)
Six Months Ended December 31, 2018
 
Core
 
Payments
 
Complementary
 
Corporate & Other
 
Total
Revenue
267,281

 
272,216

 
210,558

 
28,763

 
778,818

Deconversion Fees
(6,729
)
 
(4,347
)
 
(3,379
)
 
(39
)
 
(14,494
)
Revenue from fiscal 2019 acquisitions
(190
)
 
—

 
(36
)
 
(2
)
 
(228
)
Non-GAAP Revenue
260,362

 
267,869

 
207,143

 
28,722

 
764,096

 
 
 
 
 
 
 
 
 
 
Cost of Revenue
119,504

 
130,807

 
85,998

 
111,087

 
447,396

Non-GAAP Adjustments
(360
)
 
(44
)
 
(333
)
 
(3,720
)
 
(4,457
)
Non-GAAP Cost of Revenue
119,144

 
130,763

 
85,665

 
107,367

 
442,939

Non- GAAP Segment Income
141,218

 
137,106

 
121,478

 
(78,645
)
 
 
 
 
 
 
 
 
 
 
 
 
Research & Development
 
 
 
 
 
 
 
 
48,016

Selling, General, & Administrative
 
 
 
 
 
 
 
 
91,979

Other Non-GAAP Adjustments
 
 
 
 
 
 
 
 
(1,832
)
Non-GAAP Total Operating Expenses
 
 
 
 
 
 
 
 
581,102

Non-GAAP Operating Income
 
 
 
 
 
 
 
 
182,994


Page 5
JKHY Second Quarter Fiscal 2019
February 5, 2019


(Unaudited, In Thousands)
Six Months Ended December 31, 2017
 
Core
 
Payments
 
Complementary
 
Corporate & Other
 
Total
Revenue
250,641

 
244,274

 
191,683

 
31,895

 
718,493

Deconversion Fees
(11,252
)
 
(4,797
)
 
(4,277
)
 
(161
)
 
(20,487
)
 
—

 
—

 
—

 
—

 
—

Non-GAAP Revenue
239,389

 
239,477

 
187,406

 
31,734

 
698,006

 
 
 
 
 
 
 
 
 
 
Cost of Revenue
110,949

 
116,627

 
80,201

 
103,239

 
411,016

Non-GAAP Adjustments
418

 
—

 
71

 
(1,306
)
 
(817
)
Non-GAAP Cost of Revenue
111,367

 
116,627

 
80,272

 
101,933

 
410,199

Non- GAAP Segment Income
128,022

 
122,850

 
107,134

 
(70,199
)
 
 
 
 
 
 
 
 
 
 
 
 
Research & Development
 
 
 
 
 
 
 
 
43,343

Selling, General, & Administrative
 
 
 
 
 
 
 
 
84,181

Non-GAAP Total Operating Expenses
 
 
 
 
 
 
 
 
537,723

Non-GAAP Operating Income
 
 
 
 
 
 
 
 
160,283


Balance Sheet and Cash Flow Review
•
At December 31, 2018, cash and cash equivalents decreased to $26.2 million from $57.7 million at December 31, 2017.
•
Trade receivables totaled $184.7 million at December 31, 2018 compared to $174.8 million at December 31, 2017.
•
The company had no borrowings at December 31, 2018 and $100.0 million at December 31, 2017.
•
Total deferred revenue increased to $255.6 million at December 31, 2018, compared to $247.8 million a year ago.
•
Stockholders' equity increased to $1,392.0 million at December 31, 2018, compared to $1,250.8 million a year ago.
Cash provided by operations totaled $192.0 million in fiscal 2019 compared to $176.9 million last year. The following table summarizes net cash (in thousands) from operating activities:
(Unaudited, In Thousands)
Six Months Ended December 31,
 
2018
 
2017
Net income
$
151,640

 
$
228,113

Depreciation
22,470

 
24,602

Amortization
56,146

 
48,711

Change in deferred income taxes
1,256

 
(87,040
)
Other non-cash expenses
5,124

 
2,768

Change in receivables
113,563

 
143,914

Change in deferred revenue
(115,014
)
 
(120,910
)
Change in other assets and liabilities
(43,141
)
 
(63,250
)
Net cash provided by operating activities
$
192,044

 
$
176,908



Page 6
JKHY Second Quarter Fiscal 2019
February 5, 2019


Cash used in investing activities for fiscal 2019 totaled $109.7 million, compared to $202.3 million for the same period in fiscal 2018 and included the following:
(Unaudited, In Thousands)
Six Months Ended December 31,
 
2018
 
2017
Payment for acquisitions, net of cash acquired
$
(19,981
)
 
$
(137,654
)
Capital expenditures
(32,968
)
 
(12,249
)
Proceeds from the sale of businesses
—

 
350

Proceeds from the sale of assets
76

 
205

Internal use software
(2,694
)
 
(6,025
)
Computer software developed
(54,086
)
 
(46,936
)
Net cash from investing activities
$
(109,653
)
 
$
(202,309
)
•
On October 1, 2018, the Company acquired all of the equity interest of Agiletics, Inc for $6.3 million, net of cash acquired. Agiletics is a provider of escrow, investment, and liquidity management solutions for banks serving commercial customers.
•
On October 5, 2018, the Company acquired all of the equity interest of BOLTS Technologies, Inc for $13.7 million, net of cash acquired. BOLTS Technologies is the developer of boltsOPEN, a next-generation digital account opening solution.
Financing activities used cash of $87.7 million in fiscal 2019 and $31.6 million in fiscal 2018.
(Unaudited, In Thousands)
Six Months Ended December 31,
 
2018
 
2017
Borrowings on credit facilities
$
—

 
$
100,000

Repayments on credit facilities
—

 
(50,000
)
Purchase of treasury stock
(21,276
)
 
(30,018
)
Dividends paid
(57,104
)
 
(47,844
)
Net cash from issuance of stock and tax related to stock-based compensation
(9,295
)
 
(3,783
)
Net cash from financing activities
$
(87,675
)
 
$
(31,645
)

Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided certain non-GAAP financial measures.
These non-GAAP measures include adjusted revenue and operating income.
We believe these non-GAAP measures help investors better understand the underlying fundamentals and true operations of our business. The non-GAAP revenue and operating income presented eliminate items management believes are not indicative of the Company's operating performance. Revenue increase/ decrease adjusts for one-time deconversion fees, contributions of current fiscal year acquisitions, gain or loss on divestitures, and the impact of the new bonus program put in place with the positive impact of the Tax Cuts and Jobs Act, giving investors further insight into our performance. For these reasons, management also uses these non-GAAP measures in its assessment and management of the Company's performance.
Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Reconciliations of these non-GAAP measures to related GAAP measures are included.
Quarterly Conference Call
The company will hold a conference call on February 6, 2019; at 7:45 a.m. Central Time and investors are invited to listen at www.jackhenry.com.

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JKHY Second Quarter Fiscal 2019
February 5, 2019


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 more than 8,900 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 a 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.


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JKHY Second Quarter Fiscal 2019
February 5, 2019


Condensed Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
(In Thousands, Except Per Share Data)
Three Months Ended December 31,
 
% Change
 
Six Months Ended December 31,
 
% Change
 
2018
 
2017
 
 
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
*As Adjusted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUE
$
386,275

 
$
357,209

 
8
 %
 
$
778,818

 
$
718,493

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
227,284

 
207,100

 
10
 %
 
447,396

 
411,016

 
9
 %
Research & Development
23,990

 
22,414

 
7
 %
 
48,016

 
43,343

 
11
 %
Selling, General, & Administrative
46,797

 
43,094

 
9
 %
 
91,979

 
84,181

 
9
 %
Gain on disposal of businesses
—

 
(189
)
 
(100
)%
 
—

 
(1,894
)
 
(100
)%
Total Expenses
298,071

 
272,419

 
9
 %
 
587,391

 
536,646

 
9
 %
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME
88,204

 
84,790

 
4
 %
 
191,427

 
181,847

 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
252

 
146

 
73
 %
 
542

 
293

 
85
 %
Interest expense
(148
)
 
(250
)
 
(41
)%
 
(295
)
 
(439
)
 
(33
)%
Total
104

 
(104
)
 
(200
)%
 
247

 
(146
)
 
(269
)%
 
 
 
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
88,308

 
84,686

 
4
 %
 
191,674

 
181,701

 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
PROVISION FOR INCOME TAXES
20,219

 
(76,557
)
 
(126
)%
 
40,034

 
(46,412
)
 
(186
)%
 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME
$
68,089

 
$
161,243

 
(58
)%
 
$
151,640

 
$
228,113

 
(34
)%
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income per share
$
0.88

 
$
2.08

 
 
 
$
1.96

 
$
2.94

 
 
Diluted weighted average shares outstanding
77,409

 
77,565

 
 
 
77,474

 
77,606

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Balance Sheet Highlights (Unaudited)
 
 
 
 
 
 
 
 
 
 
(In Thousands)
 
 
 
 
 
 
December 31,
 
% Change
 
 
 
 
 
 
 
2018
 
2017
 
 
Cash and cash equivalents
 
 
 
 
 
 
$
26,156

 
$
57,719

 
(55
)%
Receivables
 
 
 
 
 
 
184,737

 
174,834

 
6
 %
Total assets
 
 
 
 
 
 
1,971,777

 
1,888,585

 
4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
 
 
$
99,211

 
$
83,598

 
19
 %
Current and long-term debt
 
 
 
 
 
 
—

 
100,000

 
(100
)%
Deferred revenue
 
 
 
 
 
 
255,636

 
247,751

 
3
 %
Stockholders' equity
 
 
 
 
 
 
1,391,955

 
1,250,769

 
11
 %


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