National Research (US:NRC)2025-03-17 14:51Revenue and Financial Performance - Revenue for 2024 decreased by $5.5 million to $143.06 million, a decline of 4% compared to 2023, primarily due to decreased recurring revenue from the existing client base [135]. - Total Recurring Contract Value (TRCV) declined to $133.22 million, down 6% from 2023, with a retention rate decrease of 4% [135][143]. - Operating income decreased to $35.19 million, a 12% decline from 2023, with an operating margin of 25% [135][140]. - Cash provided by operating activities decreased to $34.63 million, down 10% from 2023 [135][146]. Expenses - Direct expenses increased to $56.93 million, with variable expenses as a percentage of revenue rising to 16% from 15% in 2023 [135][137]. - Selling, general, and administrative expenses decreased by $1.71 million to $44.91 million, primarily due to reduced marketing and consulting expenses [135][138]. - Total other expense increased by $2.42 million, primarily due to higher interest expenses and lower interest income [135][141]. Cash and Working Capital - As of December 31, 2024, the company had $4.2 million in cash and cash equivalents, with an unused borrowing capacity of up to $30 million under its Line of Credit [145]. - The company reported a working capital deficit of $16.3 million as of December 31, 2024, compared to $11.8 million in 2023 [149]. Capital Expenditures and Investments - Capital expenditures for 2024 totaled $15.4 million, primarily for software development and headquarters renovations, with an estimated $5.8 million planned for 2025 [153]. - The company plans to invest in innovative solutions, which may cause fluctuations in direct expenses as a percentage of revenue [137]. Debt and Credit Facilities - As of December 31, 2024, the outstanding balance on the Term Loan was $14.3 million, with principal payments due in monthly installments of $92,800 through May 2027 [155]. - The outstanding balance on the Delayed Draw Term Loan was $48.5 million, with monthly principal payments of $318,790 due through May 2027 [156]. - The company had a $30.0 million revolving credit facility available as of December 31, 2024, with no borrowings outstanding [157]. - The weighted average interest rate on borrowings under the Line of Credit was 7.52% for 2024, compared to 7.67% for 2023 [157]. - The company is required to maintain a minimum fixed charge coverage ratio of 1.10x and a cash flow leverage ratio of 3.00x or less under the Credit Agreement [159]. Share Repurchase and Dividends - The company repurchased 1,154,595 shares of common stock for an aggregate of $30.8 million during 2024, leaving 307,709 shares available for repurchase under the 2022 Program [170]. - Cash dividends declared amounted to $11.3 million, $36.3 million, and $20.9 million for the years 2024, 2023, and 2022 respectively [152]. Tax and Interest Rate Considerations - The liability for gross unrecognized tax benefits related to uncertain tax positions was $2.2 million as of December 31, 2024 [167]. - Interest rate changes could impact future earnings and cash flows by approximately $592,000 annually based on a hypothetical 100 basis points change in the benchmark index rate [174].