A generally upbeat financial report from Jack Henry and Associates showed a 17 percent increase in net income for the first quarter of the new fiscal year and an increase of 3 percent in gross profit over the first quarter of fiscal year 2008-09.
For the quarter than ended on Sept. 30, the company generated total revenue of $182.3 million, compared to $183.1 million in the same quarter a year ago. Gross profit increased to $74.4 million, compared to $72.5 million in the first quarter of fiscal year 2008-09. Net income totaled $26.3 million, or 31 cents per diluted share. That total is compared to $22.5 million in net income a year ago, or 26 cents per diluted share a year ago.
Revenue remained even while the cost of sales deceased by 2 percent compared to last year.
"Both of the recently announced acquisitions support our strategy to acquire companies that provide proven solutions we can cross-sell to our core bank and credit union clients," said Jack Prim, chief executive officer for Jack Henry and Associates. Prim referred to acquisitions of the Goldleaf Financial Solutions, which closed on Oct. 1 to become part of Jack Henry's ProfitStars division, and Pemco Technologies, announced about a month later.
"These two acquisitions also strategically expand our electronic payment offerings and will provide additional points of competitive distinction once our integration initiatives are complete," Prim said.
Sales using the two new acquisitions "generate new cross-sale opportunities among our respective client bases," Prim said, "and expand the specialized products and services ProfitStars can sell to virtually any financial services organization, regardless of core processing platform or asset size."
According to Tony Wormington, Jack Henry and Associates president, product license fees and hardware sales have dropped due to the economic environment. However, revenue generated by support and services has continued to grow, offsetting other reductions.
"Weak license sales also have negatively impacted one-time implementation fees and delayed some work orders," Wormington said. "Our electronic payments revenue grew 7 percent for the quarter compared to the prior year. OutLink, which is our data and item processing revenue, also increased 7 percent compared to a year ago. We have continued to diligently manage our costs so our support and service margins increased to 39 percent compared to 37 percent in the same quarter last year."
In-house support fees, outsourcing and technology support contributed to a 3 percent increase in support and service revenue. These helped offset a 1 percent drop in license revenue and a 2 percent decline in hardware sales.
A 2 percent decrease in the cost of sales for the quarter was further supported by a 12 percent reduction in operating expenses, primarily due to decreased employee-related expenses. Selling and marketing expenses decreased 13 percent in the first quarter while general and administrative costs decreased 11 percent. Operating income increased by 18 percent for the quarter.
"Our managers and associates continue to do an outstanding job of controlling our overall costs and specifically our headcount, which is actually down 1 percent from a year ago," said Kevin Williams, chief financial officer. "At the same time our customer satisfaction ratings remain very solid, and we continue to exceed their expectations, based on the customer survey feedback."
Gross profit in the quarter rose by 3 percent to $74.4 million, compared to $72.5 million last year.
Backlogged orders, which measure future business and revenue, increased 9 percent or $25 million compared to year-ago levels.
Based in Monett, Jack Henry and Associates provides integrated computer systems and processes ATM and debit card transactions for banks and credit unions. Jack Henry markets and supports its systems throughout the United States and has more than 9,800 customers nationwide.