JKHY
$164.54
Jack Henry & Assoc
($16.92)
(9.32%)
Earnings Details
2nd Quarter December 2022
Tuesday, February 7, 2023 4:01:00 PM
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Summary

Jack Henry & Associates Lowers Guidance

Jack Henry & Assoc (JKHY) reported 2nd Quarter December 2022 earnings of $1.10 per share on revenue of $505.3 million. The consensus earnings estimate was $1.11 per share on revenue of $516.8 million. Revenue grew 2.3% on a year-over-year basis.

The company said it expects fiscal 2023 earnings of $4.79 to $4.83 per share on revenue of $2.048 billion to $2.055 billion. The company's previous guidance was earnings of $4.90 to $4.94 per share on revenue of $2.045 billion to $2.052 billion and the current consensus earnings estimate is $4.93 per share on revenue of $2.09 billion for the year ending June 30, 2023.

Jack Henry & Associates, Inc is a provider of information processing solutions for community banks. Its products and services includes processing transactions, automating business processes and managing information.

Results
Reported Earnings
$1.10
Earnings Whisper
-
Consensus Estimate
$1.11
Reported Revenue
$505.3 Mil
Revenue Estimate
$516.8 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

Jack Henry & Associates, Inc. Reports Second Quarter Fiscal 2023 Results

Fiscal year-to-date summary:

  • GAAP revenue increased 5% and GAAP operating income decreased 4% for the six months ended December 31, 2022, compared to the prior-year period.
  • Non-GAAP adjusted revenue increased 7% and non-GAAP adjusted operating income increased 3% for the six months ended December 31, 2022, compared to the prior-year period.1
  • GAAP EPS was $2.56 per diluted share for the six months ended December 31, 2022, compared to $2.68 in the prior-year period.
  • Cash at December 31, 2022, was $26 million and $29 million at December 31, 2021.
  • Debt related to the revolving credit line was $275 million at December 31, 2022, and $240 million at December 31, 2021.

Second quarter summary:

  • GAAP revenue increased 2% and GAAP operating income decreased 15% for the three months ended December 31, 2022, compared to the prior-year period.
  • Non-GAAP adjusted revenue increased 6% and non-GAAP adjusted operating income increased 4% for the three months ended December 31, 2022, compared to the prior-year period.1
  • GAAP EPS was $1.10 per diluted share for the three months ended December 31, 2022, compared to $1.30 for the prior-year period.

Full-year fiscal 2023 guidance:2

  • GAAP revenue $2,048 million to $2,055 million
  • GAAP operating margin 22.8% to 22.9%
  • GAAP EPS $4.79 to $4.83
  • Non-GAAP revenue $2,021 million to $2,028 million3
  • Non-GAAP operating margin 22.8% to 22.9%3

Key Call Outs

MONETT, Mo., Feb. 7, 2023 /PRNewswire/ -- Jack Henry & Associates, Inc. (Nasdaq: JKHY), a leading financial technology provider, today announced results for the fiscal second quarter ended December 31, 2022.

According to David Foss, Board Chair and CEO, "We are very pleased to report an overall strong performance for the second quarter of our fiscal year. The sales organization continues to work a robust pipeline of financial institutions interested in our many best-of-breed capabilities and solutions. Much of that interest is being fueled by our outstanding digital banking offerings and the growing understanding of our differentiated technology modernization strategy.  We are proud to be a well-rounded financial technology company that is committed to serving the needs of community and regional financial institutions in the United States and establishing a cloud-native ecosystem which, when applied to our digital, payments, lending, risk, and core platforms, helps our clients innovate faster, differentiate strategically, and compete successfully while serving the evolving needs of their accountholders."

1 See tables below reconciling non-GAAP financial measures to GAAP.
2 The guidance assumes no additional acquisitions are made during the year.
3 See tables below reconciling fiscal year 2023 GAAP to non-GAAP guidance.
4 See tables below on page 12 reconciling Net Income to non-GAAP EBITDA.

Operating Results

Revenue, operating expenses, operating income, and net income for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, were as follows (all dollar amounts in this section are in thousands, except for per share amounts):

Revenue (Unaudited)












(In Thousands)

Three Months Ended

December 31,


%
Change


Six Months Ended

December 31,


%
Change


2022


2021




2022


2021



Revenue












Services and Support

$  290,700


$    296,211


(2) %


$  610,849


$   593,704


3 %

Percentage of Total Revenue

58 %


60 %




59 %


60 %



Processing

214,614


197,685


9 %


423,667


388,248


9 %

Percentage of Total Revenue

42 %


40 %




41 %


40 %



REVENUE

$  505,314


$  493,896


2 %


$ 1,034,516


$   981,952


5 %

 

  • Services and support revenue decreased for the three months ended December 31, 2022, primarily driven by a decrease of 64% in deconversion fees, partially offset by growth in data processing and hosting fees of 12%. Processing revenue increased for the three months ended December 31, 2022, primarily driven by growth in card processing revenue of 7%. Other drivers were increases in payment processing, Jack Henry digital, and other processing fee revenues.
  • Services and support revenue increased for the six months ended December 31, 2022, primarily driven by growth in data processing and hosting fees of 12%. Other drivers were increases in software usage fee revenues, partially offset by a decrease in deconversion fees. Processing revenue increased for the six months ended December 31, 2022, primarily driven by growth in card processing revenue of 8%. Other drivers were increases in Jack Henry digital and payment processing revenues.
  • For the three months ended December 31, 2022, core segment revenue remained consistent, payments segment revenue increased 3%, complementary segment revenue increased 4%, and corporate and other segment revenue decreased 5%. Non-GAAP adjusted core segment revenue increased 6%, non-GAAP adjusted payments segment revenue increased 6%, non-GAAP adjusted complementary segment revenue increased 8%, and non-GAAP adjusted corporate and other segment revenue decreased 4% (see revenue lines of segment break-out tables on page 5 below).
  • For the six months ended December 31, 2022, core segment revenue increased 3%, payments segment revenue increased 6%, complementary segment revenue increased 6%, and corporate and other segment revenue increased 20%. Non-GAAP adjusted core segment revenue increased 6%, non-GAAP adjusted payments segment revenue increased 6%, non-GAAP adjusted complementary segment revenue increased 8%, and non-GAAP adjusted corporate and other segment revenue increased 21% (see revenue lines of segment break-out tables on page 5 below).

Operating Expenses and Operating Income

(Unaudited, In Thousands)

Three Months Ended

December 31,


%
Change


Six Months Ended

December 31,


%

Change



2022


2021




2022


2021




Cost of Revenue

$  304,589


$   282,825


8 %


$  602,849


$  559,460


8 %


Percentage of Total Revenue5

60 %


57 %




58 %


57 %




Research and Development

36,561


29,916


22 %


69,554


56,670


23 %


Percentage of Total Revenue5

7 %


6 %




7 %


6 %




Selling, General, and Administrative

56,788


55,493


2 %


114,013


106,565


7 %


Percentage of Total Revenue5

11 %


11 %




11 %


11 %




OPERATING EXPENSES

397,938


368,234


8 %


786,416


722,695


9 %















OPERATING INCOME

$   107,376


$   125,662


(15) %


$  248,100


$   259,257


(4 %)


Operating Margin5

21 %


25 %




24 %


26 %




 

  • Cost of revenue increased for the three months ended December 31, 2022, primarily due to higher personnel costs, higher direct costs in line with related increases in revenue, and increased amortization of intangibles. Cost of revenue increased for the six months ended December 31, 2022, primarily due to higher direct costs in line with related increases in revenue, higher personnel costs, and increased amortization of intangibles.
  • Research and development expense increased for the three and six, months ended December 31, 2022, primarily due to higher personnel costs (net of capitalized personnel costs) and higher internal licenses and fees.
  • Selling, general, and administrative expense increased for the three months ended December 31, 2022, primarily due to higher personnel costs, partially offset by the increase in gain on sale of assets. Selling, general, and administrative expense increased for the six months ended December 31, 2022, primarily due to higher personnel costs, increased travel expenses, and higher consulting and other professional services,, partially offset by the increase in gain on sale of assets.

 

Net Income

(Unaudited, In Thousands,

Except Per Share Data)

Three Months Ended

December 31,


%
Change


Six Months Ended

December 31,


%
Change


2022


2021




2022


2021



Income Before Income Taxes

$    105,210


$     125,221


(16) %


$    244,510


$    258,574


(5) %

Provision for Income Taxes

24,435


29,551


(17) %


57,186


60,791


(6) %

NET INCOME

$     80,775


$     95,670


(16) %


$    187,324


$     197,783


(5 %)

Diluted earnings per share

$        1.10


$       1.30


(15) %


$       2.56


$       2.68


(4 %)

 

  • Effective tax rates for the three months ended December 31, 2022, and 2021 were 23.2% and 23.6%, respectively. Effective tax rates for the six months ended December 31, 2022, and 2021 were 23.4% and 23.5%, respectively.

5 Operating margin is calculated by dividing operating income by revenue. Operating margin plus operating expense components as a percentage of total revenue may not equal 100% due to rounding.

According to Mimi Carsley, CFO and Treasurer, "For the second quarter of the fiscal year, private and public cloud, card processing, transaction and digital and remittance all contributed to revenue growth. As expected, based on the lack of consolidation among financial institutions, deconversion revenues were down considerably in the second fiscal quarter and are expected to be minimal the remainder of the fiscal year. As a result, our GAAP revenue increased 2%, but was up solidly 6% for the quarter on a non-GAAP basis. The decrease in deconversion revenues put downward pressure on GAAP operating income, which decreased 15%; however, non-GAAP operating income increased 4% thanks to the entire Jack Henry team's disciplined focus on cost management."








 

Impact of Non-GAAP Adjustments

The table below shows our revenue and operating income (in thousands) for the three and six months ended December 31, 2022, compared to the three and six months ended December 31, 2021, excluding the impacts of deconversion fees,  acquisitions, and gain/loss.

(Unaudited, In Thousands)

Three Months Ended
December 31,


%
Change


Six Months Ended
December 31,


%
Change


2022


2021




2022


2021















Revenue (GAAP)

$    505,314


$    493,896


2 %


$   1,034,516


$   981,952


5 %













Adjustments:












Deconversion fee revenue

(6,380)


(26,903)




(10,899)


(30,627)



Revenue from acquisition

(2,578)





(3,316)
















NON-GAAP ADJUSTED REVENUE

$    496,356


$    466,993


6 %


$   1,020,301


$   951,325


7 %

























Operating Income (GAAP)

$     107,376


$     125,662


(15) %


$    248,100


$   259,257


(4 %)













Adjustments:












Operating income from deconversion fees

(5,463)


(24,356)




(9,329)


(27,540)



Operating loss from acquisition

4,329





6,126




Gain on disposal of assets, net

(1,207)





(7,384)
















NON-GAAP ADJUSTED
OPERATING INCOME

$    105,035


$     101,306


4 %


$    237,513


$    231,717


3 %

 

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 include a reconciliation to non-GAAP adjusted operating income presented above.


Three Months Ended December 31, 2022

(Unaudited, In Thousands)

Core


Payments


Complementary


Corporate
and Other


Total

REVENUE

$  155,390


$   191,487


$        142,295


$    16,142


$  505,314

Non-GAAP adjustments*

(2,115)


(3,914)


(2,914)


(15)


(8,958)

NON-GAAP ADJUSTED REVENUE

153,275


187,573


139,381


16,127


496,356











COST OF REVENUE

68,324


108,071


59,270


68,924


304,589

Non-GAAP adjustments**

(277)


(5,898)


(174)


(67)


(6,416)

NON-GAAP ADJUSTED COST OF REVENUE

68,047


102,173


59,096


68,857


298,173











NON-GAAP ADJUSTED SEGMENT INCOME

$   85,228


$   85,400


$        80,285


$   (52,730)













Research and Development









36,561

Selling, General, and Administrative









56,788

Non-GAAP adjustments unassigned to a segment***








(201)

NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES








391,321











NON-GAAP ADJUSTED OPERATING INCOME








$  105,035

*See page 4 for breakdown of revenue non-GAAP adjustments.
**Cost of revenue non-GAAP adjustments for the Core segment were $277 related to deconversion fees, for the Payments segment were $95 related to deconversion fees and $5,803 related to the acquisition, for the Complementary segment were $174 related to deconversion fees, and for the Corporate and Other segment were $9 related to deconversion fees and $58 related to the acquisition.
***Non-GAAP adjustments unassigned to a segment were $362 related to deconversion fees, $1,046 related to the acquisition, and $1,207 related to a gain on sale of assets.


Three Months Ended December 31, 2021

(Unaudited, In Thousands)

Core


Payments


Complementary


Corporate
and Other


Total

REVENUE (GAAP)

$   154,878


$  185,505


$        136,540


$    16,973


$  493,896

Non-GAAP adjustments*

(10,853)


(7,933)


(7,917)


(200)


(26,903)

NON-GAAP ADJUSTED REVENUE

144,025


177,572


128,623


16,773


466,993











COST OF REVENUE

64,554


96,966


55,982


65,323


282,825

Non-GAAP adjustments**

(617)


(244)


(420)


(320)


(1,601)

NON-GAAP ADJUSTED COST OF REVENUE

63,937


96,722


55,562


65,003


281,224











NON-GAAP ADJUSTED SEGMENT INCOME

$   80,088


$   80,850


$         73,061


$   (48,230)













Research and Development









29,916

Selling, General, and Administrative









55,493

Non-GAAP adjustments unassigned to a segment***








(946)

NON-GAAP TOTAL ADJUSTED OPERATING EXPENSES








365,687











NON-GAAP ADJUSTED OPERATING INCOME








$   101,306

*See page 4 for breakdown of revenue non-GAAP adjustments.
**Cost of revenue non-GAAP adjustments were all related to deconversion fees.
*** Non-GAAP adjustments unassigned to a segment were all related to deconversion fees.












Six Months Ended December 31, 2022

(Unaudited, In Thousands)

Core


Payments


Complementary


Corporate
and Other


Total

Revenue

$  330,514


$  378,026


$       290,647


$   35,329


$  1,034,516

Non-GAAP adjustments*

(3,933)


(6,087)


(4,149)


(46)


(14,215)

Non-GAAP Adjusted Revenue

326,581


371,939


286,498


35,283


1,020,301











Cost of Revenue

140,564


209,226


117,708


135,351


602,849

Non-GAAP adjustments**

(418)


(7,501)


(372)


(74)


(8,365)

Non-GAAP Adjusted Cost of Revenue

140,146


201,725


117,336


135,277


594,484











Non-GAAP Adjusted Segment Income

$  186,435


$   170,214


$        169,162


$  (99,994)













Research and Development









69,554

Selling, General, and Administrative









114,013

Non-GAAP adjustments unassigned to a segment***








4,737

Non-GAAP Total Adjusted Operating Expenses








782,788











Non-GAAP Adjusted Operating Income









$   237,513

*See page 4 for breakdown of revenue non-GAAP adjustments.
**Cost of revenue non-GAAP adjustments for the Core segment were $418 related to deconversion fees, for the Payments segment were $160 related to deconversion fees and $7,341 related to the acquisition, for the Complementary segment were $372 related to deconversion fees, and for the Corporate and Other segment were $16 related to deconversion fees and $58 related to the acquisition.
***Non-GAAP adjustments unassigned to a segment were $604 related to deconversion fees, $2,042 related to the acquisition, and $7,383 related to a gain on sale of assets.












Six Months Ended December 31, 2021

(Unaudited, In Thousands)

Core


Payments


Complementary


Corporate
and Other


Total

Revenue

$   320,163


$  358,096


$        274,318


$   29,375


$  981,952

Non-GAAP adjustments*

(13,021)


(8,381)


(9,014)


(211)


(30,627)

Non-GAAP Adjusted Revenue

307,142


349,715


265,304


29,164


951,325











Cost of Revenue

131,456


191,549


110,399


126,056


559,460

Non-GAAP adjustments**

(755)


(289)


(573)


(321)


(1,938)

Non-GAAP Adjusted Cost of Revenue

130,701


191,260


109,826


125,735


557,522











Non- GAAP Adjusted Segment Income

$   176,441


$  158,455


$        155,478


$    (96,571)













Research and Development









56,670

Selling, General, and Administrative









106,565

Non-GAAP adjustments unassigned to a segment***








(1,149)

Non-GAAP Total Adjusted Operating Expenses








719,608











Non-GAAP Adjusted Operating Income









$   231,717

*See page 4 for breakdown of revenue non-GAAP adjustments.
**Cost of revenue non-GAAP adjustments were all related to deconversion fees.
*** Non-GAAP adjustments unassigned to a segment were all related to deconversion fees.

The table below shows our GAAP to non-GAAP guidance for fiscal 2023.. Non-GAAP guidance excludes the impacts of deconversion fee and acquisition revenue and operating expenses and assumes no further acquisitions are made during the fiscal year.


GAAP to Non-GAAP GUIDANCE (In Millions, except
per share data)


Annual FY23




Low


High


REVENUE (GAAP)


$ 2,048


$ 2,055


     Growth


5.4 %


5.8 %


Deconversion fees


$    15


$    15


Acquisition


12


12


NON-GAAP ADJUSTED REVENUE


$ 2,021


$ 2,028


     Non-GAAP Adjusted Growth


7.0 %


7.3 %








OPERATING EXPENSES (GAAP)


$ 1,582


$ 1,585


     Growth


7.7 %


7.9 %


Deconversion costs


$    5


$    5


Acquisition costs


23


23


Gain on disposal of assets, net


(7)


(7)


NON-GAAP ADJUSTED OPERATING EXPENSES


$ 1,561


$ 1,564


     Non-GAAP Adjusted Growth


6.8 %


7.0 %








OPERATING INCOME (GAAP)


$  466


$  470


     Growth


(1.6) %


(0.7) %








OPERATING INCOME MARGIN (GAAP)


22.8 %


22.9 %








NON-GAAP ADJUSTED OPERATING INCOME


$  460


$  464


     Non-GAAP Adjusted Growth


7.6 %


8.6 %








NON-GAAP ADJUSTED OPERATING INCOME MARGIN


22.8 %


22.9 %








EPS (GAAP)


$  4.79


$  4.83


     Growth


(3.0) %


(2.2) %

Balance Sheet and Cash Flow Review

Press release charts

  • At December 31, 2022, cash and cash equivalents decreased to $26 million from $29 million at December 31, 2021.
  • Trade receivables totaled $246 million at December 31, 2022, compared to $236 million at December 31, 2021.
  • The Company had $275 million of borrowings at December 31, 2022, and $240 million at December 31, 2021.
  • Total deferred revenue increased to $285 million at December 31, 2022, compared to $276 million a year ago.
  • Stockholders' equity increased to $1,511 million at December 31, 2022, compared to $1,272 million a year ago.

*See table below for Net Cash Provided by Operating Activities and on page 12 for Return on Average Shareholders' Equity. Tables reconciling the non-GAAP measures Free Cash Flow and return on invested capital (ROIC) to GAAP measures are also on page 12. See the Use of Non-GAAP Financial Information section below for the definition of Free Cash Flow and ROIC.

The following table summarizes net cash from operating activities:

(Unaudited, In Thousands)

Six Months Ended December 31,


2022


2021

Net income

$          187,324


$          197,783

Depreciation

24,766


25,843

Amortization

68,946


62,610

Change in deferred income taxes

(27,611)


11,573

Other non-cash expenses

7,304


13,267

Change in receivables

102,672


70,468

Change in deferred revenue

(125,433)


(119,822)

Change in other assets and liabilities

(47,257)


(64,371)

NET CASH PROVIDED BY OPERATING ACTIVITIES

$           190,711


$           197,351

 

The following table summarizes net cash from investing activities:

(Unaudited, In Thousands)

Six Months Ended December 31,


2022


2021

Payment for acquisitions, net of cash acquired*

$        (229,628)


$              —

Capital expenditures

(17,376)


(22,373)

Proceeds from dispositions

27,885


38

Purchased software

(1,027)


(7,364)

Computer software developed

(81,046)


(71,353)

NET CASH FROM INVESTING ACTIVITIES

$          (301,192)


$          (101,052)

*During first quarter fiscal 2023, the Company completed its previously announced acquisition of Payrailz.

The following table summarizes net cash from financing activities:

(Unaudited, In Thousands)

Six Months Ended December 31,


2022


2021

Borrowings on credit facilities*

$        365,000


$        220,000

Repayments on credit facilities and financing leases

(205,042)


(80,065)

Purchase of treasury stock


(193,917)

Dividends paid

(71,454)


(67,696)

Net cash from issuance of stock and tax related to stock-based compensation

(1,047)


3,507

NET CASH FROM FINANCING ACTIVITIES

$         87,457


$          (118,171)

*The Company's acquisition of Payrailz during first quarter fiscal 2023 was primarily funded by new borrowings under the Company's revolving credit facility..

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 include 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, including adjusted revenue, adjusted operating income, adjusted segment income, adjusted cost of revenue, adjusted operating expenses, non-GAAP earnings before interest, taxes, depreciation, and amortization (non-GAAP EBITDA), free cash flow, and return on invested capital (ROIC).

We believe non-GAAP financial measures help investors better understand the underlying fundamentals and true operations of our business. Adjusted revenue, adjusted operating income, adjusted operating income margin, adjusted segment income, adjusted cost of revenue, and adjusted operating expenses, eliminate one-time deconversion fees and associated costs, the effects of acquisitions and divestitures, and gain/loss on the disposal of assets, all of which management believes are not indicative of the Company's operating performance. Such adjustments give investors further insight into our performance. Non-GAAP EBITDA is defined as net income attributable to the Company before the effect of interest expense, taxes, depreciation, and amortization, adjusted for net income before the effect of interest expense, taxes, depreciation, and amortization attributable to eliminated one-time deconversion fees, acquisitions and divestitures, and gain/loss on the disposal of assets. Free cash flow is defined as net cash from operating activities, less capitalized expenditures, internal use software, and capitalized software, plus proceeds from the sale of assets. ROIC is defined as net income divided by average invested capital, which is the average of beginning and ending long-term debt and stockholders' equity for a given period. Management believes that non-GAAP EBITDA is an important measure of the Company's overall operating performance and excludes certain costs and other transactions that management deems one time or non-operational in nature; free cash flow is useful to measure the funds generated in a given period that are available for debt service requirements and strategic capital decisions; and ROIC is a measure of the Company's allocation efficiency and effectiveness of its invested capital. For these reasons, management also uses these non-GAAP financial measures in its assessment and management of the Company's performance.

Non-GAAP financial measures used by the Company may not be comparable to similarly titled non-GAAP measures used by other companies. Non-GAAP financial measures have no standardized meaning prescribed by GAAP and therefore, are unlikely to be comparable with calculations of similar measures for other companies.

Any non-GAAP financial 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 the non-GAAP financial measures to related GAAP measures are included.

Quarterly Conference Call

The Company will hold a conference call on February 8, 2023; at 7:45 a.m. Central Time and investors are invited to listen at www.jackhenry.com. A webcast replay will be available approximately one hour after the event at ir.jackhenry.com/events-and-presentations and will remain available for one year.

About Jack Henry & Associates, Inc.®

Jack Henry™ (Nasdaq: JKHY) is a well-rounded financial technology company that strengthens connections between financial institutions and the people and businesses they serve. We are an S&P 500 company that prioritizes openness, collaboration, and user centricity — offering banks and credit unions a vibrant ecosystem of internally developed modern capabilities as well as the ability to integrate with leading fintechs. For more than 45 years, Jack Henry has provided technology solutions to enable clients to innovate faster, strategically differentiate, and successfully compete while serving the evolving needs of their accountholders. We empower approximately 7,800 clients with people-inspired innovation, personal service, and insight-driven solutions that help reduce the barriers to financial health. Additional information is available at www.jackhenry.com.

Statements made in this news release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because forward-looking statements relate to the future, they are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those discussed in the Company's Securities and Exchange Commission filings, including the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading Risk Factors. Any forward-looking statement made in this news release speaks only as of the date of the news release, and the Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether because of new information, future events or otherwise.

Condensed Consolidated Statements of Income (Unaudited)

(In Thousands, except per share data)

Three Months Ended
December 31,


%
Change


Six Months Ended
December 31,


%
Change


2022


2021




2022


2021















REVENUE

$    505,314


$    493,896


2 %


$   1,034,516


$    981,952


5 %













Cost of Revenue

304,589


282,825


8 %


602,849


559,460


8 %

Research and Development

36,561


29,916


22 %


69,554


56,670


23 %

Selling, General, and
Administrative

56,788


55,493


2 %


114,013


106,565


7 %

EXPENSES

397,938


368,234


8 %


786,416


722,695


9 %













OPERATING INCOME

107,376


125,662


(15) %


248,100


259,257


(4) %













Interest income

1,240


6


20,567 %


1,392


13


10,608 %

Interest expense

(3,406)


(447)


662 %


(4,982)


(696)


616 %

Interest Income (Expense),
net

(2,166)


(441)


391 %


(3,590)


(683)


426 %













INCOME BEFORE INCOME TAXES

105,210


125,221


(16) %


244,510


258,574


(5) %













Provision for Income Taxes

24,435


29,551


(17) %


57,186


60,791


(6) %













NET INCOME

$     80,775


$      95,670


(16) %


$    187,324


$    197,783


(5) %













Diluted net income per share

$        1.10


$        1.30




$       2.56


$       2.68



Diluted weighted average
shares outstanding

73,144


73,697




73,141


73,920















Consolidated Balance Sheet Highlights (Unaudited)

(In Thousands)







December 31,


%
Change








2022


2021



Cash and cash equivalents







$     25,763


$     29,120


(12) %

Receivables







246,378


236,096


4 %

Total assets







2,578,277


2,280,802


13 %













Accounts payable and accrued expenses






$    192,774


$     164,518


17 %

Current and long-term debt







275,021


240,129


15 %

Deferred revenue







284,843


275,778


3 %

Stockholders' equity







1,510,990


1,271,996


19 %













 

Calculation of Non-GAAP Earnings Before Income Taxes, Depreciation and Amortization (Non-GAAP EBITDA)


Three Months Ended
December 31,


%
Change


Six Months Ended
December 31,


%
Change

(in thousands)

2022


2021




2022


2021



Net income

$     80,775


$      95,670




$    187,324


$    197,784



Interest, net 

2,166


441




3,590


682



Taxes

24,436


29,551




57,186


60,791



Depreciation and
amortization

48,102


44,280




93,712


88,453



Less: Net income before
interest expense, taxes,
depreciation and
amortization attributable to
eliminated one-time
deconversions, acquisitions,
and gain on disposal of
assets, net.*

(5,683)


(24,356)




(14,530)


(27,540)



NON-GAAP EBITDA

$     149,796


$     145,586


3 %


$    327,282


$    320,170


2 %

 

*The fiscal second quarter adjustments for net income before interest expense, taxes, depreciation and amortization for deconversions, acquisitions, and gain on disposal of assets, net, were $5,463, $(988), and $1,207, respectively, and the prior fiscal year second quarter adjustment was for deconversions only.  The fiscal year-to-date adjustments for net income before interest expense, taxes, depreciation and amortization for deconversions, acquisitions, and gain on disposal of assets, net, were $9,329, $(2,183), and $7,384, respectively, and the prior fiscal year-to-date  adjustment was for deconversions only.






Calculation of Free Cash Flow (Non-GAAP)

Six Months Ended
December 31,



(in thousands)

2022


2021



Net cash from operating activities

$     190,711


$     197,351



Capitalized expenditures

(17,376)


(22,373)



Internal use software

(1,027)


(7,364)



Proceeds from sale of assets

27,885


38



Capitalized software

(81,046)


(71,353)



FREE CASH FLOW

$     119,147


$     96,299









Calculation of the Return on Average Shareholders' Equity

December 31,



( in thousands)

2022


2021



Net income (trailing four quarters)

$   352,457


$    346,055



Average stockholder's equity (period beginning and ending
balances)

1,391,493


1,408,588



RETURN ON AVERAGE SHAREHOLDERS' EQUITY

25.3 %


24.6 %









Calculation of Return on Invested Capital (ROIC) (Non-GAAP)

December 31,



(in thousands)

2022


2021



Net income (trailing four quarters)

$   352,457


$    346,055









Average stockholder's equity (period beginning and ending
balances)

1,391,493


1,408,588



Average current maturities of long-term debt (period beginning and
ending balances)

62


110



Average long-term debt (period beginning and ending balances)

257,513


120,088



Average invested capital

$  1,649,068


$   1,528,786









ROIC

21.4 %


22.6 %



 

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SOURCE Jack Henry & Associates, Inc.