National Research (US:NRC)2026-03-05 14:57Revenue and Income - Revenue for 2025 decreased by $5.7 million to $137.39 million, a decline of 4% compared to 2024[137] - Operating income decreased by 36% to $22.59 million in 2025, attributed to lower revenue and increased compensation expenses[137] - Adjusted Net Income for 2025 was $20.74 million, down from $24.99 million in 2024[148] - Adjusted EBITDA for 2025 was $40.18 million, slightly down from $41.59 million in 2024, with an Adjusted EBITDA margin of 29.2%[149] Expenses - Direct expenses represented 38% of revenue in 2025, down from 40% in 2024, due to reduced labor costs through operational automation[139] - Selling, general, and administrative expenses increased by $9.9 million, primarily due to $6.6 million in bonuses related to executive leadership transition[140] - The effective tax rate increased to 35% in 2025 from 24% in 2024, influenced by executive compensation exceeding limits and fluctuating state income taxes[143] Cash Flow and Working Capital - Cash provided by operating activities decreased by 24% to $26.45 million in 2025 compared to $34.63 million in 2024[137] - The company reported a working capital deficit of $16.4 million as of December 31, 2025, compared to $16.3 million in the previous year[153] Capital Expenditures and Dividends - Cash dividends declared amounted to $11.8 million in 2025, an increase from $11.3 million in 2024, with a quarterly cash dividend increase from $0.12 to $0.16 per share starting January 2026[156] - Capital expenditures for the year ended December 31, 2025, totaled $10.7 million, primarily for building improvements and software development[157] Debt and Compliance - The outstanding balance on the Delayed Draw Term Loan was $79.4 million as of December 31, 2025, with principal amounts due in equal monthly installments[160] - The company has a minimum fixed charge coverage ratio requirement of 1.10x and a cash flow leverage ratio of 3.50x or less under its Credit Agreement, and it was in compliance as of December 31, 2025[163] Stock and Shareholder Actions - The company repurchased 1,307,709 shares of common stock for a total of $20 million under two stock repurchase programs in 2025[167][168] Future Outlook - The company expects revenue, operating margin, and operating cash flow to grow in 2026, supported by increasing TRCV and efficiency measures[135] Interest Rate and Tax Risks - Interest on borrowings under the Delayed Draw Term Loan and Revolving Loan is at a floating rate, with a weighted average interest rate of 6.63% for the year ended December 31, 2025[159][161] - The company is exposed to interest rate risk, with potential changes in earnings and cash flows of approximately $0.8 million annually from a hypothetical 100 basis points change in interest rates[171] - The company had a liability for gross unrecognized tax benefits of $2.4 million related to uncertain tax positions as of December 31, 2025[165] Total Recurring Contract Value - Total Recurring Contract Value (TRCV) increased from $144.14 million in 2025 to $152.0 million by March 4, 2026, marking an all-time high[138]