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

Rhea-AI Summary

National Research Corporation (NASDAQ:NRC) reports Q2 2020 revenue of $31.2 million, a slight decline from $31.4 million in Q2 2019. Operating income decreased to $9.3 million from $10.1 million. The company provided uncompensated services due to client challenges amidst COVID-19, impacting revenue without offsetting expenses. Net income rose to $7.7 million, up from $7.4 million year-over-year. Diluted earnings per share increased to $0.30. Total Recurring Contract Value grew by 11%, with Voice of the Customer offerings expanding 30% year-over-year.

Positive

• Net new sales increased by 6% in Q2 and 19% year-to-date compared to 2019.
• Total recurring contract value rose by 11%, showcasing client retention.
• Voice of the Customer contract value reached $107 million, up 30% year-over-year.

Negative

• Revenue declined from $31.4 million in Q2 2019 to $31.2 million in Q2 2020.
• Operating income decreased from $10.1 million in Q2 2019 to $9.3 million.

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

FAQ

What were NRC's Q2 2020 earnings per share?

NRC reported diluted earnings per share of $0.30 for Q2 2020.

How did NRC's revenue perform in Q2 2020 compared to Q2 2019?

NRC's revenue was $31.2 million in Q2 2020, down from $31.4 million in Q2 2019.

What was the impact of COVID-19 on NRC's financial results?

NRC provided uncompensated services due to COVID-19, affecting revenue and operating income.

What is the Total Recurring Contract Value for NRC in Q2 2020?

Total Recurring Contract Value increased by 11% in Q2 2020.

How much did NRC's Voice of the Customer offering grow year-over-year?

Voice of the Customer contract value grew by 30% year-over-year.