National Research Corporation Announces Second Quarter and Year-To-Date 2020 Results

Tuesday, 04. August 2020 23:00

LINCOLN, Neb., Aug. 04, 2020 (GLOBE NEWSWIRE) -- National Research Corporation (NASDAQ:NRC) today announced results for the second quarter of 2020.

Revenue for the quarter ended June 30, 2020, was $31.2 million, compared to $31.4 million for the quarter ended June 30, 2019. Operating income was $9.3 million for the second quarter 2020 compared to $10.1 million for the same quarter 2019. In response to special circumstances among clients hard hit by COVID-19, we elected to provide uncompensated services which reduced revenue without a corresponding offset in expenses, thus impacting operating income. All such impacted clients have resumed compensated services as planned to date and many extended contract terms in recognition of the support provided by NRC Health resulting, we believe, in a stronger partnership. We salute all essential caregivers and are glad we could offer this support.

Net income for the quarter ended June 30, 2020, was $7.7 million, compared to $7.4 million for the quarter ended June 30, 2019. Diluted earnings per share increased to $0.30 for the quarter ended June 30, 2020, from diluted earnings per share of $0.29 for the quarter ended June 30, 2019. Results for the second quarter 2020 included an income tax provision of $842,000 compared with $2.1 million for the same quarter 2019.

Demand for our product portfolio remains strong. Net New Sales were up 6% in the second quarter and 19% year-to-date 2020 compared to 2019, despite a pivot to virtual sales efforts. Based on recent wins, we believe our offerings are highly differentiated in our clients’ eyes against competitive offerings from firms outside of the healthcare industry and legacy vendors within. Case in point, we added healthcare brands Partners HealthCare and Orlando Health this quarter, each seven-figure takeaways from Press Ganey. We believe every added client deepens our moat and brings additive value to all current partners through the network effect.

Total Recurring Contract Value increased 11% in the second quarter 2020, a subset of which is our digital Voice of the Customer offering. VOC now comprises $107 million of Contract Value, up 30% year-over-year. We believe the efficiencies inherent in this digital platform lead to long-term margin improvements, a hallmark of our financial performance, notwithstanding the current quarter impact of COVID-19. Our Voice of the Customer offerings, being uniquely personalized to healthcare, contribute to higher client retention rates as well, compounding the enhancing visibility of recurring revenue streams.

It goes without saying that COVID-19 is far from behind us and we continue to recognize and support the work of our healthcare partners and caregivers worldwide. NRC Health retains its conservative stance regarding liquidity for the security of our associates and optionality as a business. Accordingly, our Board of Directors has determined not to pay a dividend for the current quarter.

A listen-only simulcast of National Research Corporation’s 2020 second quarter conference call will be available online at https://edge.media-server.com/mmc/p/ayrm72gm on August 5, 2020, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately one hour later and continue for 30 days.

For more than 39 years, National Research Corporation has been a leading provider of analytics and insights that facilitate measurement and improvement of human understanding.

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,” 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, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 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 the future status of our partnership with clients 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.

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


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,    
  2020   2019   2020   2019 
     
Revenue$  31,166  $  31,414  $  65,026  $  62,894 
     
Operating expenses:    
Direct expenses 11,634   11,506     24,180     23,160 
Selling, general and administrative 8,852   8,319   17,600   16,026 
Depreciation and amortization   1,405     1,440      2,777      2,855 
  Total operating expenses   21,891     21,265     44,557     42,041 
     
  Operating income 9,275   10,149   20,469   20,853 
     
Other income (expense):    
  Interest income 2   8   13   14 
  Interest expense (450)  (533)  (914)  (1,103)
  Other, net   (270)    (139)    360     (419)
     
  Total other expense   (718)    (664)    (541)    (1,508)
     
  Income before income taxes 8,557   9,485   19,928   19,345 
     
Provision for income taxes   842     2,092     458     3,756 
     
  Net income$  7,715  $  7,393  $  19,470  $  15,589 
     
Earnings Per Share of Common Stock:    
     
Basic Earnings Per Share$    0.31  $    0.30  $  0.78  $  0.63 
Diluted Earnings Per Share$  0.30  $  0.29  $  0.76  $  0.61 
     
Weighted average shares and share equivalents outstanding
  Basic
   25,148     24,789     25,060     24,777 
  Diluted   25,680     25,586     25,702     25,549 

 

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

 June 30,
2020
  December 31,
2019
 
       
Assets       
Current assets:       
Cash and cash equivalents$11,957  $13,517 
Accounts receivable, net 19,882   11,639 
Income taxes receivable 272   69 
Other current assets 4,586   3,932 
Total current assets 36,697   29,157 
        
Net property and equipment 12,355   13,530 
Goodwill 57,829   57,935 
Other, net 9,900   10,063 
Total assets$116,781  $110,685 
        
Liabilities and Shareholders’ Equity       
Current liabilities:       
Notes payable$3,966  $4,378 
Accounts payable and accrued expenses 3,882   4,687 
Accrued compensation 6,830   6,086 
Income taxes payable 308   366 
Dividends payable --   5,239 
Deferred revenue 16,275   16,354 
Other current liabilities 1,007   1,045 
Total current liabilities 32,268   38,155 
        
Notes payable, net of current portion 28,627   29,795 
Other non-current liabilities 10,312   9,843 
Total liabilities 71,207   77,793 
        
Shareholders’ equity:       
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued --   -- 
Common stock, $0.001 par value; authorized 60,000,000 shares, issued 30,553,546 in 2020 and 30,151,574 in 2019, outstanding 25,235,123 in 2020 and 24,947,500 in 2019 31   30 
Additional paid-in capital 167,808   162,154 
Retained earnings (accumulated deficit) (79,165  (93,357
Accumulated other comprehensive loss, foreign currency translation adjustment (2,872)  (2,209)
Treasury stock (40,228)  (33,726)
Total shareholders’ equity 45,574   32,892 
Total liabilities and shareholders’ equity$116,781  $110,685 

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