National Research (NRC) - 2021 Q1 - Quarterly Report

PART I – Financial Information This section presents the company's unaudited condensed consolidated financial statements for the quarter ended March 31, 2021 Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2021, detailing financial position, performance, and cash flows Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $43,454 | $34,690 | | Total current assets | $62,235 | $54,112 | | Goodwill | $61,614 | $57,255 | | Total assets | $146,878 | $133,423 | | Liabilities and Shareholders' Equity | | | | Total current liabilities | $36,938 | $31,681 | | Total liabilities | $73,628 | $69,108 | | Total shareholders' equity | $73,250 | $64,315 | | Total liabilities and shareholders' equity | $146,878 | $133,423 | Condensed Consolidated Statements of Income This section details the company's financial performance over a period, showing revenues, expenses, and net income Condensed Consolidated Statements of Income (in thousands, except per share data) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Revenue | $35,464 | $33,860 | | Total operating expenses | $23,444 | $22,666 | | Operating income | $12,020 | $11,194 | | Net income | $9,232 | $11,755 | | Basic Earnings Per Share | $0.36 | $0.47 | | Diluted Earnings Per Share | $0.36 | $0.46 | Condensed Consolidated Statements of Comprehensive Income This section presents net income and other comprehensive income items, reflecting all changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Net income | $9,232 | $11,755 | | Foreign currency translation adjustment | $56 | $(1,124) | | Comprehensive income | $9,288 | $10,631 | Condensed Consolidated Statements of Shareholders' Equity This section details changes in the company's equity accounts, including net income, share repurchases, and other equity transactions - Total shareholders' equity increased from $64.3 million at December 31, 2020, to $73.3 million at March 31, 2021, primarily driven by net income of $9.2 million[20] - During the three months ended March 31, 2021, the company purchased 26,932 shares of treasury stock for $1.21 million[20] Condensed Consolidated Statements of Cash Flows This section reports the cash generated and used by the company across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,408 | $5,523 | | Net cash used in investing activities | $(4,238) | $(590) | | Net cash used in financing activities | $(1,429) | $(7,536) | | Change in cash and cash equivalents | $8,764 | $(3,496) | | Cash and cash equivalents at end of period | $43,454 | $10,021 | Notes to Condensed Consolidated Financial Statements This section provides additional details and explanations for the figures presented in the financial statements - In March 2021, the company changed its operating segments from six to one to reflect a change in corporate reporting structure[27] - On January 4, 2021, the company acquired substantially all assets of PatientWisdom, Inc. for a total consideration of $5.0 million in cash, adding a health engagement solution to its portfolio[56] - The effective tax rate for Q1 2021 was a 20.5% expense, a significant increase from the 3.4% benefit in Q1 2020, mainly due to decreased tax benefits from share-based compensation awards and higher state income taxes[62] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, liquidity, and capital resources for Q1 2021, highlighting revenue growth and operational changes Results of Operations This section analyzes the company's revenue, operating expenses, and profitability for the period, explaining key drivers of change Revenue and Operating Income Comparison (in millions) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $35.5 | $33.9 | +4.7% | | Operating Income | $12.0 | $11.2 | +7.1% | - Revenue growth was primarily due to new customer sales and increased sales to the existing client base, partially offset by a $605,000 decrease in conference revenue due to a shift to a virtual format[101] - Direct expenses decreased by 4.8% to $11.9 million, mainly due to lower postage, printing, and travel costs, despite an increase in contracted services[102] - Selling, general and administrative (SG&A) expenses increased by 8.8% to $9.5 million, driven by higher software, hosting, and contracted services costs, partially offset by lower travel expenses[103] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and fund its operations - As of March 31, 2021, the company's principal sources of liquidity included $43.5 million in cash and cash equivalents, a $30 million unused line of credit, and a $15 million delayed draw term note[108] - Working capital increased to $25.3 million at March 31, 2021, from $22.4 million at December 31, 2020, primarily due to an $8.8 million increase in cash and cash equivalents[110][111] Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Provided by operating activities | $14,408 | $5,523 | | Used in investing activities | $(4,238) | $(590) | | Used in financing activities | $(1,429) | $(7,536) | - The company was in compliance with all financial covenants related to its credit facilities as of March 31, 2021[128] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposures compared to its prior annual report - There are no material changes to the disclosures regarding market risk exposures from the company's 2020 Annual Report on Form 10-K[139] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[140] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[141] PART II – Other Information This section provides additional disclosures on legal proceedings, risk factors, equity sales, and exhibits Legal Proceedings The company is involved in routine legal claims and litigation, with management not expecting a material adverse financial impact - The company is involved in claims and litigation from time to time in the normal course of business, but management does not expect any material adverse effect from the final disposition of current claims[142] Risk Factors This section refers to the significant risk factors detailed in the company's prior annual report that could materially affect its business - For a description of significant risk factors, the report refers to Part I, Item 1A of the company's annual report on Form 10-K for the year ended December 31, 2020[143] Unregistered Sales of Equity Securities and Use of Proceeds The company provides an update on its stock repurchase program, noting no repurchases during the quarter and remaining authorized shares - No Common Stock was repurchased under the company's authorization program during the three-month period ended March 31, 2021[145] - The remaining number of shares of Common Stock that may be purchased under the repurchase authorization is 280,491[145] Exhibits This section lists the exhibits filed with the report, including CEO and CFO certifications and iXBRL financial statements - The exhibits filed with this report include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 1350, as well as iXBRL formatted financial statements[151]