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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): April 30, 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 April 30, 2019, Jack Henry & Associates, Inc. issued a press release announcing fiscal 2019 third 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 April 30, 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:
April 30, 2019
 
/s/ Kevin D. Williams
 
 
 
Kevin D. Williams
 
 
 
Chief Financial Officer and Treasurer



Exhibit
JKHY Third Quarter Fiscal 2019
April 30, 2019


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

FOR IMMEDIATE RELEASE

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

•
Year-to-date summary:
◦
GAAP revenue increased 6% and operating income decreased 2% for the nine months ended March 31, 2019.
◦
Non-GAAP revenue increased 8% and operating income increased 9% for the nine months ended March 31, 2019.
◦
GAAP EPS was $2.72 and $3.83 per diluted share for the nine months ended March 31, 2019 and 2018, respectively.

•
Third quarter summary:
◦
GAAP revenue increased 2% and operating income decreased 16% for the quarter.
◦
Non-GAAP revenue increased 5% and operating income decreased 1% for the quarter.
◦
GAAP EPS was $0.77 per diluted share for the quarter, compared to $0.89 in the prior year quarter.

Monett, MO, April 30, 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 third 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 March 31, 2019 increased to $380.4 million, a 2% improvement over the third quarter of fiscal 2018. Operating income decreased 16% to $76.4 million and net income decreased 14% to $59.3 million, or $0.77 per diluted share, compared to the third quarter of fiscal 2018. The decrease was due primarily to decreased deconversion fees in the current quarter and added expense related to a bonus program enacted by the Company in fiscal 2019 in response to the Tax Cuts and Jobs Act ("TCJA").
For the nine months ended March 31, 2019, revenue increased to $1,159.2 million, a 6% increase compared to the nine months ended March 31, 2018. Operating income decreased 2% over the prior year-to-date period to $267.9 million. Net income totaled $210.9 million, or $2.72 per diluted share for the nine months ended March 31, 2019, a 29% decrease compared to the nine months ended March 31, 2018. This decrease in net income was primarily due to a large tax benefit recognized in fiscal 2018 as a result of the enactment of the TCJA.
Non-GAAP Results for the Quarter
On an adjusted basis for the quarter ended March 31, 2019, revenue increased 5% compared to the prior year quarter to $372.0 million. Operating income decreased 1% to $71.7 million.
For the nine months ended March 31, 2019, non-GAAP adjusted revenue increased 8% compared to the nine months ended March 31, 2019 to $1,136.1 million, and operating income increased 9% to $254.7 million.
According to David Foss, President and CEO, “We are pleased to report another strong quarter of revenue and operating income growth. Customer demand for Jack Henry technology solutions continues to be very strong, leading to another outstanding quarter for our sales organization.  We were also extremely pleased to have recently been recognized for the third year in a row by Forbes as one of America’s Best Large Employers.  The associates at Jack Henry have created an environment that is regularly recognized as a best place to work and I couldn’t be prouder of our team.”
Operating Results
Revenue, operating expenses, operating income, and net income for the three and nine months ended March 31, 2019, as compared to the three and nine months ended March 31, 2018, were as follows:

Page 1
JKHY Third Quarter Fiscal 2019
April 30, 2019


Revenue (Unaudited)
 
 
 
 
 
 
 
 
 
(In Thousands)
Three Months Ended
March 31,
% Change
 
Nine Months Ended
March 31,
% Change
 
2019

 
2018

 
 
2019

 
2018

 
Revenue
 
 
 
 
 
 
 
 
 
Services & Support
$
234,123

 
$
236,214

(1
)%
 
$
718,014

 
$
685,984

5
%
Percentage of Total Revenue
62
%
 
63
%
 
 
62
%
 
63
%
 
Processing
146,241

 
137,834

6
 %
 
441,168

 
406,557

9
%
Percentage of Total Revenue
38
%
 
37
%
 
 
38
%
 
37
%
 
Total Revenue
380,364

 
374,048

2
 %
 
1,159,182

 
1,092,541

6
%
•
The decreased revenue in the services and support line for the third quarter of fiscal 2019 was due to decreased deconversion revenue, partially offset by growth in our 'outsourcing and cloud' and 'in-house support' revenue streams. The increase in processing revenue was mainly driven by organic growth in each of the three components of processing revenue, which are 'remittance,' 'card,' and 'transaction and digital.' Deconversion fees, which are included within services and support, decreased $10.3 million compared to the third quarter of the prior year. Excluding deconversion fees from both periods, and revenue from fiscal 2019 acquisitions, total revenue increased 5% for the third quarter of fiscal 2019 compared to the same quarter of fiscal 2018.
•
For the nine months ended March 31, 2019, deconversion fees decreased $16.3 million compared to the prior year-to-date period. Excluding deconversion fees from both periods and revenue from fiscal 2019 acquisitions, total revenue increased 8%. The increase in Services & Support was primarily driven by increased 'outsourcing and cloud' revenue, partially due to added revenue from Ensenta, as well as increased 'in-house support' revenue, primarily from higher software usage revenue resulting partially from the addition of new customers. All components of processing revenue increased for the year-to-date period.
•
For the third quarter of fiscal 2019, core segment revenue increased 1% to $130.6 million from $129.3 million in the third quarter of fiscal 2018. Payments segment revenue increased 3% to $135.0 million, from $130.8 million in the same quarter last year. Revenue from the complementary segment increased 2% to $102.5 million in the third quarter of fiscal 2019 from $100.9 million in the same quarter of fiscal 2018. Revenue in the corporate and other segment decreased 6% to $12.2 million, compared to $13.0 million for the third quarter of fiscal 2018.
•
For the nine months ended March 31, 2019, revenue in the core segment increased 5% to $397.9 million, compared to $380.0 million for the nine months ended March 31, 2018. Payments segment revenue increased 9% to $407.2 million, from $375.1 million for the prior year-to-date period. Complementary segment revenue increased 7% to $313.1 million, up from $292.6 million in the prior year-to-date period. Revenue from the corporate and other segment decreased 9% to $41.0 million for the nine months ended March 31, 2019 from $44.9 million for the nine months ended March 31, 2018.
Operating Expenses and Operating Income
(Unaudited, In Thousands)
Three Months Ended
March 31,
% Change
 
Nine Months Ended
March 31,
% Change
 
2019

 
2018

 
 
2019

 
2018

 
Cost of Revenue
$
235,594

 
$
218,517

8
 %
 
$
682,990

 
$
629,532

8
 %
Percentage of Total Revenue
62
%
 
58
%
 
 
59
%
 
58
%
 
Research and Development
23,442

 
22,591

4
 %
 
71,458

 
65,934

8
 %
Percentage of Total Revenue
6
%
 
6
%
 
 
6
%
 
6
%
 
Selling, General, & Administrative
44,887

 
42,233

6
 %
 
136,866

 
126,415

8
 %
Percentage of Total Revenue
12
%
 
11
%
 
 
12
%
 
12
%
 
Gain on disposal of a business
—

 
—

—
 %
 
—

 
(1,894
)
(100
)%
Total Operating Expenses
303,923

 
283,341

7
 %
 
891,314

 
819,987

9
 %
Operating Income
$
76,441

 
$
90,707

(16
)%
 
$
267,868

 
$
272,554

(2
)%
Operating Margin
20
%
 
24
%
 
 
23
%
 
25
%
 
•
Cost of revenue increased 8% for the third quarter of fiscal 2019 compared to the third quarter of fiscal 2018 and increased 4% as a percentage of revenue. Excluding costs related to deconversions, fiscal 2019 acquisitions, and bonuses provided by the Company in response to the lower tax rate resulting from the TCJA, cost of revenue increased 7%. The increased costs were primarily due to higher direct costs of product, including spending related to our ongoing project to expand our credit and debit card platform; increased headcount driving increased salaries and benefits; increased amortization expense; and increased costs related to new facilities.

Page 2
JKHY Third Quarter Fiscal 2019
April 30, 2019


•
For the nine months ended March 31, 2019, cost of revenue increased 8% compared to the equivalent period of the prior year, and increased 1% as a percentage of revenue. Excluding costs related to deconversions, fiscal 2019 acquisitions, and bonuses provided by the Company in response to the lower tax rate resulting from the TCJA, cost of revenue increased 8%, with the increase driven by the same factors discussed above.
•
Research and development expense increased for both the third quarter and year-to-date period mainly due to increased salary and personnel costs resulting from increased headcount, but remained consistent with the prior year third quarter and year-to-date periods as a percentage of total revenue.
•
Selling, general, and administrative expenses for both the third quarter and year-to-date period of fiscal 2019 increased mainly due to increased salaries, benefits, and commission expenses. Selling, general, and administrative expense increased 1% as a percentage of revenue for the third quarter, but remained a consistent percentage of revenue for the year-to-date period.
•
There were no sales of businesses in fiscal 2019. For the first nine months of fiscal 2018, gains on disposals of businesses totaled $1.9 million, due to the dispositions of our ATM Manager and jhaDirect product lines.
•
For the third quarter of fiscal 2019, operating income decreased 16% to $76.4 million, or 20% of revenue, compared to $90.7 million, or 24% of revenue in the third quarter of fiscal 2018. For the year-to-date period, operating income decreased 2% to $267.9 million, or 23% of revenue, compared to operating income of $272.6 million, 25% of revenue, for the nine months ended March 31, 2018.
Net Income
Net income for the nine months ended March 31, 2019 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
March 31,
% Change
 
Nine Months Ended
March 31,
% Change
 
2019

 
2018

 
 
2019

 
2018

 
Income Before Income Taxes
$
76,372

 
$
90,103

(15
)%
 
$
268,045

 
$
271,805

(1
)%
Provision for Income Taxes
17,120

 
21,017

(19
)%
 
57,153

 
(25,394
)
325
 %
Net Income
$
59,252

 
$
69,086

(14
)%
 
$
210,892

 
$
297,199

(29
)%
Diluted earnings per share
$
0.77

 
$
0.89

(14
)%
 
$
2.72

 
$
3.83

(29
)%
•
Provision for income taxes decreased in the third quarter, with an effective tax rate at 22.4% of income before income taxes, compared to 23.3% for the same quarter of the prior year. The lower effective tax rate in the third quarter of fiscal 2019 was mainly due to the reduced U.S federal corporate tax rate effective for the current fiscal year.
•
For the nine months ended March 31, 2019, provision for income taxes increased, with an effective tax rate at 21.3% of income before income taxes, compared to (9.3)% for the same period last year. The prior nine month period included a significant tax benefit as a result of the enactment of the TCJA and re-measurement of net deferred tax liabilities. The increase in the provision for income taxes 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 and Treasurer, “Deconversion fees were down significantly this quarter as we predicted on the last earnings call, which is a positive for us long-term as we retain our customers and the recurring revenue, but it creates a tough comparison on a GAAP basis, which is why we continue to show operations excluding this impact on a Non-GAAP basis. With almost all new customers opting for outsourced delivery, other revenue headwinds are decreased license fees to in-house customers and implementation revenues related to outsourced customers, which must be deferred and amortized to revenue over the life of the contract. Our operating margins continue to show the headwinds created by the double costs related to the migration to our new 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.”

Page 3
JKHY Third Quarter Fiscal 2019
April 30, 2019


Non-GAAP Impact of Deconversion Fees, Acquisitions, Gains on Divestitures, and New Bonus Program
The table below shows our revenue and operating income (in thousands) for the third quarter and nine months ended March 31, 2019 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 March 31,
 
% Change
 
Nine Months Ended March 31,
 
% Change
 
2019
 
2018
 
 
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported Revenue (GAAP)
$
380,364

 
$
374,048

 
2
 %
 
$
1,159,182

 
$
1,092,541

 
6
 %
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Deconversion fees
(8,051
)
 
(18,381
)
 
 
 
(22,545
)
 
(38,868
)
 
 
Revenue from fiscal 2019 acquisitions
(323
)
 
—

 
 
 
(552
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Revenue
$
371,990

 
$
355,667

 
5
 %
 
$
1,136,085

 
$
1,053,673

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported Operating Income (GAAP)
$
76,441

 
$
90,707

 
(16
)%
 
$
267,868

 
$
272,554

 
(2
)%
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Deconversion fees
(7,483
)
 
(18,105
)
 
 
 
(21,509
)
 
(37,775
)
 
 
Operating (income)/ loss from fiscal 2019 acquisitions
436

 
—

 
 
 
911

 
—

 
 
Bonus Program
2,309

 
—

 
 
 
7,427

 
—

 
 
Gain on disposal of businesses
—

 
—

 
 
 
—

 
(1,894
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Operating Income
$
71,703

 
$
72,602

 
(1
)%
 
$
254,697

 
$
232,885

 
9
 %

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 March 31, 2019
 
Core
 
Payments
 
Complementary
 
Corporate & Other
 
Total
Revenue
130,604

 
135,018

 
102,534

 
12,208

 
380,364

Deconversion Fees
(4,020
)
 
(2,187
)
 
(1,841
)
 
(3
)
 
(8,051
)
Revenue from fiscal 2019 acquisitions
(277
)
 
—

 
(46
)
 
—

 
(323
)
Non-GAAP Revenue
126,307

 
132,831

 
100,647

 
12,205

 
371,990

 
 
 
 
 
 
 
 
 
 
Cost of Revenue
63,977

 
68,700

 
45,733

 
57,184

 
235,594

Non-GAAP Adjustments
(567
)
 
(62
)
 
(596
)
 
(1,159
)
 
(2,384
)
Non-GAAP Cost of Revenue
63,410

 
68,638

 
45,137

 
56,025

 
233,210

Non- GAAP Segment Income
62,897

 
64,193

 
55,510

 
(43,820
)
 

 
 
 
 
 
 
 
 
 
 
Research & Development
 
 
 
 
 
 
 
 
23,442

Selling, General, & Administrative
 
 
 
 
 
 
 
 
44,887

Other Non-GAAP Adjustments
 
 
 
 
 
 
 
 
(1,252
)
Non-GAAP Total Operating Expenses
 
 
 
 
 
 
 
 
300,287

Non-GAAP Operating Income
 
 
 
 
 
 
 
 
71,703


Page 4
JKHY Third Quarter Fiscal 2019
April 30, 2019


(Unaudited, In Thousands)
Three Months Ended March 31, 2018
 
Core
 
Payments
 
Complementary
 
Corporate & Other
 
Total
Revenue
129,343

 
130,845

 
100,876

 
12,984

 
374,048

Deconversion Fees
(8,381
)
 
(5,317
)
 
(4,680
)
 
(3
)
 
(18,381
)
Non-GAAP Revenue
120,962

 
125,528

 
96,196

 
12,981

 
355,667

 
 
 
 
 
 
 
 
 
 
Cost of Revenue
60,802

 
62,893

 
41,832

 
52,990

 
218,517

Non-GAAP Adjustments
(638
)
 
(49
)
 
(176
)
 
587

 
(276
)
Non-GAAP Cost of Revenue
60,164

 
62,844

 
41,656

 
53,577

 
218,241

Non- GAAP Segment Income
60,798

 
62,684

 
54,540

 
(40,596
)
 
 
 
 
 
 
 
 
 
 
 
 
Research & Development
 
 
 
 
 
 
 
 
22,591

Selling, General, & Administrative
 
 
 
 
 
 
 
 
42,233

Non-GAAP Total Operating Expenses
 
 
 
 
 
 
 
 
283,065

Non-GAAP Operating Income
 
 
 
 
 
 
 
 
72,602


(Unaudited, In Thousands)
Nine Months Ended March 31, 2019
 
Core
 
Payments
 
Complementary
 
Corporate & Other
 
Total
Revenue
397,885

 
407,233

 
313,093

 
40,971

 
1,159,182

Deconversion Fees
(10,749
)
 
(6,533
)
 
(5,221
)
 
(42
)
 
(22,545
)
Revenue from fiscal 2019 acquisitions
(468
)
 
—

 
(82
)
 
(2
)
 
(552
)
Non-GAAP Revenue
386,668

 
400,700

 
307,790

 
40,927

 
1,136,085

 
 
 
 
 
 
 
 
 
 
Cost of Revenue
183,481

 
199,506

 
131,731

 
168,272

 
682,990

Non-GAAP Adjustments
(928
)
 
(105
)
 
(929
)
 
(4,879
)
 
(6,841
)
Non-GAAP Cost of Revenue
182,553

 
199,401

 
130,802

 
163,393

 
676,149

Non- GAAP Segment Income
204,115

 
201,299

 
176,988

 
(122,466
)
 
 
 
 
 
 
 
 
 
 
 
 
Research & Development
 
 
 
 
 
 
 
 
71,458

Selling, General, & Administrative
 
 
 
 
 
 
 
 
136,866

Other Non-GAAP Adjustments
 
 
 
 
 
 
 
 
(3,085
)
Non-GAAP Total Operating Expenses
 
 
 
 
 
 
 
 
881,388

Non-GAAP Operating Income
 
 
 
 
 
 
 
 
254,697


Page 5
JKHY Third Quarter Fiscal 2019
April 30, 2019


(Unaudited, In Thousands)
Nine Months Ended March 31, 2018
 
Core
 
Payments
 
Complementary
 
Corporate & Other
 
Total
Revenue
379,984

 
375,120

 
292,558

 
44,879

 
1,092,541

Deconversion Fees
(19,632
)
 
(10,115
)
 
(8,957
)
 
(164
)
 
(38,868
)
Non-GAAP Revenue
360,352

 
365,005

 
283,601

 
44,715

 
1,053,673

 
 
 
 
 
 
 
 
 
 
Cost of Revenue
171,751

 
179,520

 
122,033

 
156,228

 
629,532

Non-GAAP Adjustments
(220
)
 
(49
)
 
(105
)
 
(719
)
 
(1,093
)
Non-GAAP Cost of Revenue
171,531

 
179,471

 
121,928

 
155,509

 
628,439

Non- GAAP Segment Income
188,821

 
185,534

 
161,673

 
(110,794
)
 
 
 
 
 
 
 
 
 
 
 
 
Research & Development
 
 
 
 
 
 
 
 
65,934

Selling, General, & Administrative
 
 
 
 
 
 
 
 
126,415

Non-GAAP Total Operating Expenses
 
 
 
 
 
 
 
 
820,788

Non-GAAP Operating Income
 
 
 
 
 
 
 
 
232,885


Balance Sheet and Cash Flow Review
•
At March 31, 2019, cash and cash equivalents decreased to $35.4 million from $57.4 million at March 31, 2018.
•
Trade receivables totaled $190.8 million at March 31, 2019 compared to $176.9 million at March 31, 2018.
•
The company had $35.0 million of borrowings at March 31, 2019 and $105.0 million at March 31, 2018.
•
Total deferred revenue increased to $207.9 million at March 31, 2019, compared to $185.4 million a year ago.
•
Stockholders' equity increased to $1,426.0 million at March 31, 2019, compared to $1,296.5 million a year ago.
Cash provided by operations totaled $233.4 million in fiscal 2019 compared to $234.9 million last year. The following table summarizes net cash (in thousands) from operating activities:
(Unaudited, In Thousands)
Nine Months Ended March 31,
 
2019
 
2018
Net income
$
210,892

 
$
297,199

Depreciation
34,722

 
36,470

Amortization
84,605

 
75,787

Change in deferred income taxes
3,287

 
(86,593
)
Other non-cash expenses
8,834

 
6,161

Change in receivables
107,535

 
141,799

Change in deferred revenue
(162,742
)
 
(183,286
)
Change in other assets and liabilities
(53,764
)
 
(52,665
)
Net cash provided by operating activities
$
233,369

 
$
234,872



Page 6
JKHY Third Quarter Fiscal 2019
April 30, 2019


Cash used in investing activities for fiscal 2019 totaled $148.0 million, compared to $239.1 million for the same period in fiscal 2018 and included the following:
(Unaudited, In Thousands)
Nine Months Ended March 31,
 
2019
 
2018
Payment for acquisitions, net of cash acquired
$
(19,981
)
 
$
(137,654
)
Capital expenditures
(42,417
)
 
(17,858
)
Proceeds from the sale of businesses
—

 
350

Proceeds from the sale of assets
95

 
258

Internal use software
(4,266
)
 
(6,965
)
Computer software developed
(81,438
)
 
(72,186
)
Purchase of investments
$
—

 
$
(5,000
)
Net cash from investing activities
$
(148,027
)
 
$
(239,055
)
•
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 $81.4 million in fiscal 2019 and $53.2 million in fiscal 2018.
(Unaudited, In Thousands)
Nine Months Ended March 31,
 
2019
 
2018
Borrowings on credit facilities
$
35,000

 
$
125,000

Repayments on credit facilities
—

 
(70,000
)
Purchase of treasury stock
(21,276
)
 
(30,018
)
Dividends paid
(87,970
)
 
(76,429
)
Net cash from issuance of stock and tax related to stock-based compensation
(7,138
)
 
(1,733
)
Net cash from financing activities
$
(81,384
)
 
$
(53,180
)

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 May 1, 2019; at 7:45 a.m. Central Time and investors are invited to listen at www.jackhenry.com.

Page 7
JKHY Third Quarter Fiscal 2019
April 30, 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. The S&P 500 company's solutions serve more than 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 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.


Page 8
JKHY Third Quarter Fiscal 2019
April 30, 2019


Condensed Consolidated Statements of Income (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
(In Thousands, Except Per Share Data)
Three Months Ended March 31,
 
% Change
 
Nine Months Ended March 31,
 
% Change
 
2019
 
2018
 
 
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
*As Adjusted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUE
$
380,364

 
$
374,048

 
2
 %
 
$
1,159,182

 
$
1,092,541

 
6
 %
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
235,594

 
218,517

 
8
 %
 
682,990

 
629,532

 
8
 %
Research & Development
23,442

 
22,591

 
4
 %
 
71,458

 
65,934

 
8
 %
Selling, General, & Administrative
44,887

 
42,233

 
6
 %
 
136,866

 
126,415

 
8
 %
Gain on disposal of businesses
—

 
—

 
—
 %
 
—

 
(1,894
)
 
(100
)%
Total Expenses
303,923

 
283,341

 
7
 %
 
891,314

 
819,987

 
9
 %
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME
76,441

 
90,707

 
(16
)%
 
267,868

 
272,554

 
(2
)%
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
155

 
130

 
19
 %
 
697

 
424

 
64
 %
Interest expense
(224
)
 
(734
)
 
(69
)%
 
(520
)
 
(1,173
)
 
(56
)%
Total
(69
)
 
(604
)
 
(89
)%
 
177

 
(749
)
 
(124
)%
 
 
 
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
76,372

 
90,103

 
(15
)%
 
268,045

 
271,805

 
(1
)%
 
 
 
 
 
 
 
 
 
 
 
 
PROVISION FOR INCOME TAXES
17,120

 
21,017

 
(19
)%
 
57,153

 
(25,394
)
 
325
 %
 
 
 
 
 
 
 
 
 
 
 
 
NET INCOME
$
59,252

 
$
69,086

 
(14
)%
 
$
210,892

 
$
297,199

 
(29
)%
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income per share
$
0.77

 
$
0.89

 
 
 
$
2.72

 
$
3.83

 
 
Diluted weighted average shares outstanding
77,286

 
77,546

 
 
 
77,411

 
77,586

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Balance Sheet Highlights (Unaudited)
 
 
 
 
 
 
 
 
 
 
(In Thousands)
 
 
 
 
 
 
March 31,
 
% Change
 
 
 
 
 
 
 
2019
 
2018
 
 
Cash and cash equivalents
 
 
 
 
 
 
$
35,398

 
$
57,402

 
(38
)%
Receivables
 
 
 
 
 
 
190,768

 
176,949

 
8
 %
Total assets
 
 
 
 
 
 
2,002,879

 
1,879,823

 
7
 %
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
 
 
 
 
 
$
106,866

 
$
85,837

 
24
 %
Current and long-term debt
 
 
 
 
 
 
35,000

 
105,000

 
(67
)%
Deferred revenue
 
 
 
 
 
 
207,908

 
185,375

 
12
 %
Stockholders' equity
 
 
 
 
 
 
1,426,003

 
1,296,546

 
10
 %


Page 9