• National Research Corporation Announces Second Quarter 2021 Results

    ソース: Nasdaq GlobeNewswire / 03 8 2021 17:00:00   America/New_York

    LINCOLN, Neb., Aug. 03, 2021 (GLOBE NEWSWIRE) -- National Research Corporation (NASDAQ:NRC) today announced results for the second quarter of 2021.

    Financial Results (Q2 2021 compared to Q2 2020):

    • Total Recurring Contract Value growth of 5% to $149.8 million
    • Revenue increased 17% to $36.4 million
    • Operating Income increased 32% to $12.2 million

    We saw significant improvement in revenue growth in the second quarter which is in line with our continued focus on increasing our revenue growth rate and enabling human understanding for the clients we serve. Our primary emphasis is on organic growth levers of increasing revenue from our core offerings within our existing client base, as well as adding new clients to increase market share. As a result, revenue from our Voice of the Customer offerings increased by 29% in the second quarter of 2021 compared to 2020, and we continued our momentum of winning new clients including The Oregon Clinic and Foundation Health Partners.

    We believe our solutions are highly differentiated in our clients’ eyes against competitive offerings from firms outside of the healthcare industry and legacy vendors within as we continue to add new clients. We believe that every added client deepens our moat and brings additive value to all current partners through the network effect and the efficiencies inherent in our subscription model have led to long-term margin improvements, a hallmark of our financial performance.

    Our cash balance increased to $48.9 million at the end of the second quarter. We have adopted a capital allocation strategy that we expect will leverage our available liquidity, along with our continued strong free cash flow to support additional M&A activity, as well as provide returns to shareholders through our dividends.

    Second quarter 2021 revenue was $36.4 million, an increase of 17% over second quarter 2020. This was primarily due to new customer sales, as well as an increase in sales to the existing client base. During the same period in 2020, we also experienced revenue reductions from COVID-19 as some clients reduced or eliminated services they purchased from us as cost-reducing measures. Consolidated operating income for the second quarter 2021 was $12.2 million or a 32% increase over the same period last year.

    Total operating expenses of $24.2 million for the second quarter 2021 increased by 10% compared to the second quarter 2020 total operating expenses of $21.9 million.

    Direct expenses increased to $12.5 million for the second quarter 2021, compared to $11.6 million for the second quarter 2020. Variable expenses increased $958,000 and fixed expenses decreased $56,000 in comparison to the same period of 2020. Variable expenses increased due to higher survey contracted services partially offset by less postage, printing, and paper costs primarily resulting from changes in survey methodologies. Conference expenses increased due to the timing and shift in attendance format of conferences. Fixed expenses decreased primarily as a result of lower salary and benefit costs, decreased equipment lease costs, and reduced company incentive event costs partially offset by higher software and platform hosting expenses. Direct expenses as a percentage of revenue decreased to 34% in the second quarter 2021 compared to 37% in the second quarter 2020.

    Selling, general and administrative expenses increased to $10.0 million for the second quarter 2021, compared to $8.9 million for the same period in 2020, primarily due to increases in public company and other legal and accounting costs, higher contracted services and increased business insurance. Selling, general and administrative expenses were 28% of revenue for the second quarter 2021 and 2020.

    Depreciation, amortization and impairment expense increased to $1.6 million in the second quarter of 2021 compared to $1.4 million in 2020, primarily due to our transformation to a distributed workforce environment, which includes building renovations in our headquarters. Depreciation, amortization and impairment expense was 5% of revenue for the second quarter 2021 and 2020.

    Other income and expense was $345,000 of other net expense in the second quarter 2021 compared to $718,000 of other net expense in second quarter of 2020. This increase in other net expense was primarily due to revaluation on intercompany transactions due to changes in the foreign exchange rate. This was partially offset by decreased interest expense due to the declining balance on our term loan.

    The Company had an income tax provision of $3.0 million for second quarter 2021 compared to $842,000 in 2020 with an effective tax rate of 25% for second quarter 2021 compared to 10% in 2020. The effective tax rate increased due to decreased tax benefits from the exercise and vesting of share-based compensation awards and higher state income taxes.
            
    Net income for second quarter 2021 was $8.9 million compared to $7.7 million for the same period last year. Diluted earnings per share increased to $0.35 for the quarter ended June 30, 2021, from diluted earnings per share of $0.30 for the quarter ended June 30, 2020.

    On a year-to-date basis, 2021 revenue increased by 11% to $71.9 million compared to $65.0 million for the first six months of 2020. Operating income for the first six months increased by 18%, from $20.5 million in 2020 to $24.3 million in 2021. Year-to-date net income for 2021 was $18.2 million compared to first half 2020 net income of $19.5 million. The decrease in net income was impacted by an increase in the effective income tax rate from 2% in 2020 to 23% in 2021 due to decreased tax benefits from the exercise and vesting of share-based compensation awards and higher state income taxes.

    For more than 40 years, National Research Corporation has been a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare providers, payers and other healthcare organizations in the United States and Canada. Our purpose is to enable human understanding by helping our clients to understand the voice of the customer with greater clarity, immediacy and depth.
            
    This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “believes,” “expect,” derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements, including those risks and uncertainties as set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2020 and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission. In this press release, the statements relating to future M&A activity, future payment of dividends, and the future impact of adding additional clients are forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.


    NATIONAL RESEARCH CORPORATION AND SUBSIDIARY
    Unaudited Condensed Consolidated Statements of Income
    (In thousands, except per share data)

      Three months ended
    June 30,
     Six months ended
    June 30,
     
      2021 2020 2021 2020 
                  
    Revenue $36,425 $31,166 $71,889 $65,026 
                  
    Operating expenses:             
    Direct expenses  12,536  11,634  24,476  24,180 
    Selling, general and administrative  10,016  8,852  19,536  17,600 
    Depreciation and amortization  1,634  1,405  3,618  2,777 
    Total operating expenses  24,186  21,891  47,630  44,557 
                  
    Operating income  12,239  9,275  24,259  20,469 
                  
    Other income (expense):             
    Interest income  3  2  6  13 
    Interest expense  (423) (450) (855) (914)
    Other, net  75  (270) 96  360 
                  
    Total other expense  (345) (718) (753) (541)
                  
    Income before income taxes  11,894  8,557  23,506  19,928 
                  
    Provision for income taxes  2,950  842  5,330  458 
                  
    Net income $8,944 $7,715 $18,176 $19,470 
                  
    Earnings Per Share of Common Stock:             
                  
    Basic Earnings Per Share $0.35 $0.31 $0.71 $0.78 
    Diluted Earnings Per Share $0.35 $0.30 $0.71 $0.76 
                  
    Weighted average shares and share equivalents outstanding             
    Basic  25,426  25,148  25,420  25,060 
    Diluted  25,645  25,680  25,656  25,702 
                  


    NATIONAL RESEARCH CORPORATION AND SUBSIDIARY
    Unaudited Condensed Consolidated Balance Sheets
    (Dollars in thousands, except share amounts and par value)

      June 30,   December 31, 
    20212020
           
    Assets       
    Current assets:       
    Cash and cash equivalents $48,899  $34,690
    Accounts receivable, net  14,157   13,923
    Income taxes receivable  153   1,235
    Other current assets  4,380   4,264
    Total current assets  67,589   54,112
            
    Property and equipment, net  11,525   11,726
    Goodwill  61,640   57,255
    Other, net  11,095   10,330
    Total assets $151,849  $133,423
            
    Liabilities and Shareholders’ Equity       
    Current liabilities:       
    Current portion of notes payable, net unamortized debt issuance costs  $4,168  $4,061
    Accounts payable and accrued expenses  4,959   4,279
    Accrued compensation  7,075   6,460
    Income taxes payable  512   --
    Deferred revenue  16,848   15,585
    Other current liabilities  3,364   1,296
    Dividends payable  3,053   --
    Total current liabilities  39,979   31,681
            
    Notes payable, net of current portion and unamortized debt issuance costs  24,434   26,547
    Other non-current liabilities  11,071   10,880
    Total liabilities  75,484   69,108
            
    Shareholders’ equity:       
    Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued  --   --
    Common stock, $0.001 par value; authorized 110,000,0000 shares in 2021 and 60,000,000 shares in 2020, issued 30,850,131 in 2021 and 30,775,154 in 2020, outstanding 25,439,013 in 2021 and 25,390,968 in 2020  31   31
    Additional paid-in capital  172,844   171,785
    Retained earnings (accumulated deficit)  (49,304)  (61,375)
    Accumulated other comprehensive loss, foreign currency translation adjustment  (2,269)  (2,399)
    Treasury stock  (44,937)  (43,727)
    Total shareholders’ equity  76,365   64,315
    Total liabilities and shareholders’ equity $151,849  $133,423

    Contact:       
    Kevin R. Karas        
    Chief Financial Officer
    402-475-2525


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