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Jack Henry & Associates First Quarter Fiscal 2013 16 Percent Increase In Net Income

 

Nov 1 - Jack Henry & Associates Inc. (NASDAQ: JKHY), a provider of technology solutions and payment processing services primarily for the financial services industry, has announced first quarter fiscal 2013 results with a 9 percent increase in revenue, an increase of 11 percent in gross profit and a 16 percent increase in net income over the first quarter of fiscal 2012.

For the quarter ended Sept. 30, 2012, the company generated total revenue of $271 million compared to $248.3 million in the same quarter a year ago.  Gross profit increased to $115.9 million from $104.4 million in the first quarter of last fiscal year. Net income in the current quarter was $42.5 million, or 49 cents per diluted share, compared to $36.5 million, or 42 cents per diluted share in the same quarter a year ago.

According to Jack Prim, CEO, "We are pleased to again announce record revenue and earnings driven by strong organic revenue growth in the quarter. As the number of bank failures has continued to decline we face fewer headwinds on our revenue growth."

Operating Results

"We experienced a very good start to our fiscal 2013 with record revenue, gross profit and operating income compared to any quarter in our history," stated Tony Wormington, president. "Our support and services revenue was once again the primary driver of our revenue growth which represented 90 percent of total revenue in the quarter. Within this line we saw strong growth in every component for the quarter compared to the prior year, which overall our support and services revenue grew 11 percent for the quarter compared to a year ago."

License revenue for the first quarter increased to $12.9 million, or 5 percent of first quarter total revenue, from $12.3 million, or 5 percent of first quarter total revenue a year ago. Support and service revenue increased 11 percent to $244.6 million, or 90 percent of total revenue in first quarter of fiscal 2013 from $220.3 million, or 89 percent of total revenue for the same period a year ago. Within support and service revenue, electronic payment services (which include ATM/debit/credit card transaction processing, bill payment, remote deposit capture and ACH transaction processing services) had the largest growth of $12.3 million or 15 percent in the first quarter compared to the same quarter a year ago. Hardware sales in the first quarter of fiscal 2013 decreased 14 percent to $13.6 million (5 percent of total revenue), from $15.8 million (6 percent of total revenue) in the first quarter of last fiscal year.

Cost of sales for the first quarter increased 8 percent to $155.1 million from $143.9 million for the first quarter in fiscal 2012. Gross profit increased 11 percent to $115.9 million for the first quarter this fiscal year from $104.4 million last year. Gross margin was 43 percent for the first quarter, compared to 42 percent in the same period last year.

Gross margin on license revenue for the first quarter of fiscal 2013 was 92 percent compared to 91 percent in the first quarter of fiscal 2012.  The change in license gross margin is a result of fluctuations in the sales mix of products delivered. Support and service gross margin was 41 percent in the first quarter of fiscal 2013, up slightly from 40 percent in the first quarter of fiscal 2012. Hardware gross margins decreased for the first quarter at 22 percent compared to 26 percent for the same quarter last year.

Operating expenses increased 4 percent in the first quarter of fiscal 2013 compared to the same quarter a year ago primarily due to increased selling and marketing expenses. Selling and marketing expenses increased 8 percent in the current year first quarter to $20.2 million, or 7 percent of total revenue, from $18.8 million, or 8 percent of prior year first quarter revenue. Research and development expenses decreased 2 percent to $14.6 million, or 5 percent of total revenue, from $14.9 million, or 6 percent of total revenue, for the first quarter in fiscal 2012. General and administrative costs increased 5 percent in the current year first quarter to $13.6 million, or 5 percent of total revenue, from $12.9 million, or 5 percent of total revenue, in the first quarter of fiscal 2012. 

Operating income increased 17 percent to $67.5 million, or 25 percent of first quarter revenue, compared to $57.8 million, or 23 percent of revenue in the first quarter of fiscal 2012. Provision for income taxes increased 19 percent in the current first quarter compared to the same quarter in fiscal 2012 and is 36 percent of income before income taxes this quarter compared to 35.4 percent of income before income taxes for the same period in fiscal 2012. The prior year percentage was lower due primarily to the Research and Experimentation Credit, which expired Dec. 31, 2011. First quarter net income totaled $42.5 million, or 49 cents per diluted share, compared to $36.5 million, or 42 cents per diluted share in the first quarter of fiscal 2012.

For the first quarter of 2013, the bank systems and services segment revenue increased 8 percent to $202.4 million from $187.1 million in the same quarter last year. Gross margin was 42 percent in both the current and prior year fiscal quarters. The credit union systems and services segment revenue increased 12 percent to $68.6 million with a gross margin of 44 percent for the first quarter of 2013 from $61.2 million and a gross margin of 42 percent in the same period a year ago. 

According to Kevin Williams, chief financial officers, "the reported results for our first fiscal quarter were slightly ahead of our internal budget, as total revenue was within 2 percent, but we were able to expand our margins slightly ahead of plan for the quarter as our managers and associates continue to do a great job of driving revenue growth and at the same time focusing on efficiencies for our company; while also continuing to provide industry leading customer service.  Currently we have approximately $224 million in cash, and the availability of our entire revolver facility to fund future acquisitions, stock buy-backs, dividends or other corporate initiatives for the benefit of our company and shareholders."



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