false 0000070487 0000070487 2023-08-01 2023-08-01
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
August 1, 2023
_______________________________________________________________________________
 
National Research Corporation
(Exact name of registrant as specified in its charter)
 
Delaware
001-35929
47-0634000
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
 
1245 Q Street, Lincoln, Nebraska
68508
(Address of principal executive offices)
(Zip Code)
 
(402) 475-2525
(Registrant's telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class Trading Symbol(s) Name of each exchange on which registered
$.001 Par Value Common Stock NRC The NASDAQ Stock Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 
 
 
Item 2.02
Results of Operations and Financial Condition.
   
 
On August 1, 2023, National Research Corporation, a Delaware corporation (the "Company"), issued a press release announcing its financial and operating results for the second quarter ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.
 
On August 2, 2023, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the second quarter ended June 30, 2023. A copy of the script for such conference call and simulcast is furnished as Exhibit 99.2 to this report. An archive of such conference call and simulcast and the related question and answer session will be available online at https://events.q4inc.com/attendee/554395066.
   
Item 9.01
Financial Statements and Exhibits.
   
 
(d)
Exhibits.
     
 
EXHIBIT
NUMBER
EXHIBIT DESCRIPTION
     
 
99.1
 
99.2
 
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
   
 
The information contained in Items 2.02 and 9.01 of this report and the exhibits hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
   
 
The information in Items 2.02 and 9.01 of this report and the exhibits hereto may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act 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 are made based on the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results or events may differ from those anticipated by forward-looking statements. Please refer to the paragraph at the end of the attached press release and various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission for information concerning risks, uncertainties, and other factors that may affect future results.
 
 
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
NATIONAL RESEARCH CORPORATION
  
 
(Registrant)
    
       
Date: August 3, 2023
By:
/s/ Kevin R. Karas
  
   
Kevin R. Karas
  
   
Senior Vice President Finance, Chief Financial Officer, Treasurer and Secretary
  
 
 
 
 
EXHIBIT INDEX
 
EXHIBIT
NUMBER
EXHIBIT DESCRIPTION
   
99.1
99.2
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
 
 

Exhibit 99.1

 

pic1.jpg

1245 Q Street, Lincoln, NE 68508

P: 1 800 388 4264 | F: 402 475 9061
nrchealth.com

 

 

 

 

Contact:

Kevin R. Karas

Chief Financial Officer

402-475-2525

         

NATIONAL RESEARCH CORPORATION ANNOUNCES

SECOND QUARTER 2023 RESULTS

     

 

 

LINCOLN, Nebraska (August 1, 2023) — National Research Corporation, dba NRC Health, (NASDAQ:NRC) today announced results for the second quarter 2023.

 

Regarding the Company’s 2023 second quarter, Kevin Karas, Chief Financial Officer, said, “Our continued expansion of sales and marketing resources over the past several quarters have been effective in building our sales pipeline. In the second quarter of 2023, we gained momentum in converting pipeline opportunities which resulted in a 53% increase in new sales compared to the second quarter of 2022. Sales have also been driven by consistent growth in our Human Understanding Program, with adoption through June 30, 2023, of 39 healthcare organizations. We have also focused on aligning our cost structure with business requirements based on our current level of revenue to increase operating margins. We realized improved operating margins in the second quarter as compared to the first quarter and will continue cost alignment changes to achieve margin expansion in future quarters.”

 

The Company’s Board of Directors maintained its capital allocation priorities of funding innovation and growth investments, including merger and acquisition activity, as well as internal projects, shareholder dividends and share repurchases during 2023. In the second quarter of 2023, the Company funded $4.2 million for innovation and growth, $3.0 million for dividend payments, and $1.8 million for share repurchases.

 

Diluted earnings per share decreased to $0.29 for the quarter ended June 30, 2023, from diluted earnings per share of $0.33 for the quarter ended June 30, 2022.

 

 
 

 

NRC Announces Second Quarter 2023 Results

Page 2

August 1, 2023

 

 

A live simulcast of National Research Corporation’s 2023 first quarter conference call will be available online at https://events.q4inc.com/attendee/554395066 August 2, 2023, 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 40 years, NRC Health (NASDAQ: NRC) has led the charge to humanize healthcare and support organizations in their understanding of each unique individual. NRC Health’s commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship. Guided by its uniquely empathic heritage, NRC Health’s patient-focused approach, unmatched market research, and emphasis on consumer preferences are transforming the healthcare experience, creating strong outcomes for patients and entire healthcare systems. For more information, email  info@nrchealth.com, or visit www.nrchealth.com.

 

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,” “expect,” 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, 2022 and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission. 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.

 

 
 

 

NRC Announces Second Quarter 2023 Results

Page 3

August 1, 2023

 

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

  
   

2023

    

2022

    

2023

    

2022

  
                                 

Revenue

   $ 36,161     $ 37,292     $ 72,634     $ 75,734  
                                 

Operating expenses:

                                

Direct

     13,309       13,758       27,589       28,537  

Selling, general and administrative

     11,966       10,748       23,750       21,397  

Depreciation and amortization

     1,521       1,290       2,915       2,606  

Total operating expenses

     26,796       25,796       54,254       52,540  
                                 

Operating income

     9,365       11,496       18,380       23,194  
                                 

Other income (expense):

                                

Interest income

     273       14       523       19  

Interest expense

     (192

)

     (318

)

     (433

)

     (635

)

Other, net

     (2

)

     (128

)

     (15

)

     (81

)
                                 

Total other income (expense)

     79       (432

)

     75       (697

)
                                 

Income before income taxes

     9,444       11,064       18,455       22,497  
                                 

Provision for income taxes

     2,171       2,742       4,219       5,636  
                                 

Net income

   $ 7,273     $ 8,322     $ 14,236     $ 16,861  
                                 

Earnings Per Share of Common Stock:

                                

Basic Earnings Per Share

   $ 0.30     $ 0.33     $ 0.58     $ 0.67  

Diluted Earnings Per Share

   $ 0.29     $ 0.33     $ 0.58     $ 0.67  
                                 

Weighted average shares and share equivalents outstanding:

                                

Basic

     24,578       25,083       24,582       25,166  

Diluted

     24,716       25,211       24,727       25,300  

 

 
 

 

NRC Announces Second Quarter 2023 Results

Page 4

August 1, 2023

 

 

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands, except share amounts and par value)

 

   

June 30,

2023

    

December 31,

2022

  

Assets

                

Current assets:

                

Cash and cash equivalents

   $ 22,496     $ 25,026  

Accounts receivable, net

     11,891       14,461  

Other current assets

     6,600       4,229  

Total current assets

     40,987       43,716  
                 

Property and equipment, net

     22,609       17,248  

Goodwill

     61,614       61,614  

Other, net

     8,417       7,883  

Total assets

   $ 133,627     $ 130,461  
                 

Liabilities and Shareholders’ Equity

                

Current liabilities:

                

Current portion of notes payable

   $ 4,606     $ 4,491  

Accounts payable and accrued expenses

     5,872       5,136  

Accrued compensation

     4,578       4,551  

Deferred revenue

     14,828       15,198  

Dividends payable

     2,949       2,956  

Other current liabilities

     903       1,085  

Total current liabilities

     33,736       33,417  
                 

Notes payable, net of current portion and unamortized debt issuance costs

     15,358       17,690  

Other non-current liabilities

     6,783       7,321  

Total liabilities

     55,877       58,428  
                 

Shareholders’ equity:

                

Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued

     --       --  

Common stock, $0.001 par value; authorized 110,000,000 shares, issued 30,963,119 in 2023 and 30,922,181 in 2022, outstanding 24,576,092 in 2023 and 24,628,173 in 2022

     31       31  

Additional paid-in capital

     176,646       175,453  

Retained earnings (accumulated deficit)

     (16,849

)

     (25,184

)
                 

Treasury stock

     (82,078

)

     (78,267

)

Total shareholders’ equity

     77,750       72,033  

Total liabilities and shareholders’ equity

   $ 133,627     $ 130,461  

 

 

 

Exhibit 99.2

 

Kevin:

 

 

Thank you, ___________, and welcome everyone to National Research Corporation’s 2023 second quarter earnings call. My name is Kevin Karas, the company’s CFO, and joining me on the call today is Linda Stacy, our Vice President of Finance.

 

 

Before we continue, I would ask Linda to review conditions related to any forward-looking statements that may be made as part of today’s call. Linda.

 

 

Linda:

 

 

Thank you, Kevin.

 

 

This conference call includes forward-looking statements related to the Company that involve risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the facts that could affect the Company's future results, please see the Company's filings with the Securities and Exchange Commission. With that, I’ll turn it back to you, Kevin.

 

 
 
 

 

Kevin:

 

 

Thanks, Linda, and again, welcome everyone.

 

 

Over the past several quarters we have significantly expanded our sales force and marketing spend focused on supporting the rollout of our Human Understanding Program.

 

 

While it’s early days, material expansion of sales and marketing resources has been very effective in building a stronger sales pipeline and in the second quarter of 2023 we gained momentum in converting opportunities, which resulted in a 53% increase in new sales compared to the second quarter of 2022.

 

 

To date one-third of our Human Understanding Program clients are from new logos, with two-thirds representing adoption from current partner organizations. Contract value growth for Human Understanding Program adoption by existing clients is 12%, in line with results from the successful rollout of our Real-Time solution several years ago.

 

 

Let me turn the call back over to Linda to review our financial performance and then open the call to your questions.

 

2
 

 

Linda

 

 

Thank you, Kevin.

 

 

Revenue for the second quarter 2023 decreased compared to the second quarter of 2022 by 3% partially attributed to the closure of our Canadian operations and discontinuation of other non-core solutions.

 

 

We ended the quarter with $146.6 million in TRCV including a 1% increase in TRCV for our core solutions. Our TRCV metric represents the total revenue projected under all renewable contracts for their respective next annual renewal periods, assuming no upsells, downsells, price increases, or cancellations, measured as of the most recent quarter end.

 

 

Operating income decreased by 19% for the second quarter of 2023 compared to the second quarter of 2022 primarily due to the decline in revenue and growth in marketing expenses of $906,000 to expand brand recognition and support sales development.

 

 

We have been focusing on the alignment of our cost structure with business requirements and the results were positive this quarter. Although we increased spending for sales and marketing expansion, we were able to reduce consolidated operating expenses resulting in a 2.4% gross margin and 1.2% operating income margin improvement in the second quarter as compared to the first quarter of 2023. We are implementing other cost alignment changes that will enable continued quarterly margin improvement in future quarters.

 

3
 

 

The effective tax rate in the second quarter of 2023 was 23% compared to 25% in 2022 primarily due to increased tax benefits from the exercise of share-based compensation awards.

 

 

The Company’s Board of Directors maintained its capital allocation priorities of funding innovation and growth investments, including merger and acquisition activity, as well as internal projects, shareholder dividends and share repurchases during 2023. In the second quarter of 2023, the Company funded $4.2 million for innovation and growth, $3.0 million for dividend payments, and $1.8 million for share repurchases.

 

 

That concludes my comments for this morning. I’ll now turn the call back to Kevin.

 

 

Kevin

 

 

Thank you, Linda.

 

4
 

 

This completes our prepared remarks, so operator I will now ask you to open the call to any questions.

 

 

Closing Statement – Kevin

 

 

Thank you for your time today. We look forward to sharing our results again next quarter.

 

5
v3.23.2
Document And Entity Information
Aug. 01, 2023
Document Information [Line Items]  
Entity, Registrant Name National Research Corporation
Document, Type 8-K
Document, Period End Date Aug. 01, 2023
Entity, Incorporation, State or Country Code DE
Entity, File Number 001-35929
Entity, Tax Identification Number 47-0634000
Entity, Address, Address Line One 1245 Q Street
Entity, Address, City or Town Lincoln
Entity, Address, State or Province NE
Entity, Address, Postal Zip Code 68508
City Area Code 402
Local Phone Number 475-2525
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol NRC
Security Exchange Name NASDAQ
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0000070487
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