Tyler Technologies, Inc. (NYSE: TYL) today announced it has signed a
definitive agreement to acquire privately held New World Systems
Corporation for $670 million in cash and stock. New World Systems, a
leading provider of public safety and financial solutions for local
governments, will bring an important element to Tyler's portfolio of
Founded in 1981 by president and CEO Larry D. Leinweber, the Troy,
Michigan-based company has more than 2,000 public sector customers and
more than 470 employees. The companies are highly complementary, and
combining them supports Tyler's strategy of being an industry leader in
all major enterprise applications essential to local government.
New World Systems' principal products are Aegis™, a
comprehensive public safety suite for dispatch centers, police officers,
firefighters, paramedics, corrections officers, command staff, and all
first responders, and Logos™, a suite of public
administration software that meets the accounting needs of city and
county governments. Public safety represents approximately 67 percent of
New World Systems' revenues.
Under the terms of the agreement, Tyler will acquire all of the equity
in New World Systems for $360 million in cash and approximately 2.1
million shares of Tyler's common stock, representing approximately 5.9
percent of Tyler's outstanding common shares post transaction, subject
to customary post-closing adjustments. The cash portion of the purchase
price will be funded from cash on hand and proceeds from a new revolving
credit facility. The transaction is expected to close in the fourth
quarter of 2015 and is subject to regulatory approval and customary
closing conditions. Leinweber will join Tyler's board of directors upon
the closing of the transaction.
This transaction is expected to be immediately accretive to non-GAAP
earnings per diluted share, with an expected impact to non-GAAP revenues
of approximately $134 million, to adjusted EBITDA of approximately $49
million, and to non-GAAP earnings per diluted share of approximately
$0.56 for the year ending December 31, 2016. These estimates are
non-GAAP measures that reflect certain adjustments Tyler makes to
provide insight into operating results. A description of those
adjustments is provided below.
"This is a complementary and extremely comfortable acquisition for
Tyler. The companies serve related addressable markets, our cultures are
very compatible, and we have similar financial and operational
philosophies," said John S. Marr Jr., Tyler's president and CEO. "This
transaction demonstrates Tyler's commitment to creating shareholder
value by putting our assets to work with the acquisition of a company
that's already performing well financially and operationally in segments
of the public sector market that are strategically important to us.
We're excited about creating value without straying from our core
competencies, which lets us avoid the risks that others assume by
attempting transformative acquisitions.
"Acquiring New World Systems is a highly strategic and growth-oriented
decision, and we plan to invest in their products and find new
opportunities both in our combined client bases and in markets where
they currently are most competitive," Marr said. "We will also explore
growth opportunities from offering enhanced services such as software as
a service (SaaS), disaster recovery services and other existing Tyler
products to New World Systems' installed customer base."
Tyler plans to integrate its Odyssey® courts and justice
solution with the Aegis public safety platform to create a unique
end-to-end enterprise criminal justice solution.
"Odyssey is already a clear leader in courts and justice software, and
we're seeing very solid growth from our e-filing solution. By adding a
market leading public safety offering to Tyler's portfolio of courts and
justice solutions, we can deliver a comprehensive enterprise criminal
justice system that does not exist in the market today," Marr said. "We
believe it's important for the judicial and public safety communities to
understand the incremental value they gain from having a leading courts
and justice system and a leading public safety solution in one offering.
We believe that our combined offering will create a unique opportunity
for communities at the local, county and statewide levels."
While New World Systems is Tyler's largest acquisition to date, Tyler
has a long and successful track record of creating value through
inorganic growth. There are no plans to materially impact either
company's workforce, and New World Systems' headquarters in Michigan is
expected to continue to operate virtually unchanged.
"I certainly see this transaction as an opportunity for New World
Systems employees and clients to benefit from the kind of investments
and vision that Tyler Technologies brings to bear," said Larry D.
Leinweber, founder, president and CEO of New World Systems. "Both
companies operate and have grown in a very responsible manner, our
products are strong, we deliver good financial results and have high
client retention. Tyler and New World Systems are complementary in so
many ways that it's hard to see anything but tremendous opportunity for
employees, clients and investors alike."
Wells Fargo Securities, LLC, acted as financial advisor to Tyler
Technologies for this transaction.
Investor Conference Call
A conference call to discuss this transaction is scheduled today at 9:00
a.m. Eastern Time. Access to the conference call and an accompanying
presentation describing the transaction, as well as a replay of the
call, will be available in the investor relations section of Tyler's
website at http://investors.tylertech.com/Profile.
The live call may also be accessed by dialing 866-777-2509 (U.S.
callers) or 412-317-5413 (international callers), and asking to join the
"Tyler Technologies" call. A replay will be available two hours after
the call ends through October 8, 2015. To access the replay, please dial
877-344-7529 (U.S. callers), 412-317-0088 (international callers) and
855-669-9658 (Canada callers) and reference access code 10073225.
About Tyler Technologies, Inc.
Tyler Technologies (NYSE: TYL) is a leading provider of end-to-end
information management solutions and services for local governments.
Tyler partners with clients to empower the public sector - cities,
counties, schools and other government entities - to become more
efficient, more accessible and more responsive to the needs of citizens.
Tyler's client base includes more than 13,000 local government offices
in all 50 states, Canada, the Caribbean, the United Kingdom and other
international locations. Forbes has named Tyler one of "America's Best
Small Companies" eight times and the company has been included six times
on the Barron's 400 Index, a measure of the most promising companies in
America. More information about Plano-based Tyler Technologies can be
found at www.tylertech.com.
Non-GAAP Financial Measures
Tyler Technologies has provided in this press release guidance and
estimates with respect to non-GAAP financial measures. We use these
non-GAAP financial measures internally in analyzing our financial
results and believe they are useful to investors, as a supplement to
GAAP measures, in evaluating Tyler's ongoing operational performance.
Tyler believes the use of these non-GAAP financial measures provides an
additional tool for investors to use in evaluating ongoing operating
results and trends and in comparing our financial results with other
companies in our industry, many of which present similar non-GAAP
financial measures. Non-GAAP financial measures discussed above exclude:
the impact of fair value adjustments required under GAAP relating to
acquired customer support contracts which would have otherwise been
recognized on a standalone basis; share-based compensation expense and
the employer portion of payroll taxes on employee stock transactions;
and expenses associated with amortization of intangibles arising from
business combinations; and fees and expenses associated with
acquisitions. Because Tyler does not predict special items that might
occur in the future, and its outlook is developed at a level of detail
different than that used to prepare GAAP financial measures, Tyler is
not providing a reconciliation to GAAP of its forward-looking financial
measures for the year ending December 31, 2016.
We use these measures and believe they are useful to investors because
they provide additional insight in comparing results from period to
period. Non-GAAP financial measures should be considered in addition to,
and not as a substitute for, or superior to, financial information
prepared in accordance with GAAP. The non-GAAP measures used by Tyler
Technologies may be different from non-GAAP measures used by other
This document contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 that are not
historical in nature and typically address future or anticipated events,
trends, expectations or beliefs with respect to our financial condition,
results of operations or business. Forward-looking statements often
contain words such as "believes," "expects," "anticipates," "foresees,"
"forecasts," "estimates," "plans," "intends," "continues," "may,"
"will," "should," "projects," "might," "could" or other similar words or
phrases. Similarly, statements that describe our business strategy,
outlook, objectives, plans, intentions or goals also are forward-looking
Such statements relate to a variety of matters, including: the
operations of the businesses of Tyler and New World Systems separately
and as a combined entity; the timing and consummation of the proposed
transaction; the expected benefits of the integration of the two
companies; the combined company's plans, objectives, expectations and
intentions; and other statements that are not historical in nature (such
as future revenues, costs and expenses, operating income, earnings per
share, margins, cash flows, and capital expenditures). These statements
are made on the basis of the current beliefs, expectations and
assumptions of the management of Tyler and New World Systems regarding
future events and are subject to certain risks and uncertainties.
Investors are cautioned not to place reliance on any such
forward-looking statements, which speak only as of the date they are
made. Neither Tyler nor New World Systems undertakes any obligation to
update or revise these statements, whether as a result of new
information, future events or otherwise.
Actual results may differ materially from those expressed or implied.
Such differences may result from a variety of factors, including: legal
or regulatory proceedings or other matters that affect the timing or
ability to complete the transactions as contemplated; the risk that the
businesses will not be integrated successfully; the loss of senior
management or key employees of Tyler or New World Systems; the
possibility of disruption from the merger making it more difficult to
maintain business and operational relationships; the possibility that
the merger does not close, including due to the failure to satisfy the
closing conditions; any actions taken by either of the companies,
including restructuring or strategic initiatives (including capital
investments or asset acquisitions or dispositions); developments beyond
the companies' control, including: changes in domestic or global
economic conditions, competitive conditions and customer preferences;
natural disasters; international, political or military developments;
and technological developments. Additional information on factors that
could cause results to differ materially from those described in the
forward-looking statements are set forth in our filings with the
Securities and Exchange Commission, including the detailed "Risk
Factors" contained in our most recent annual report on Form 10-K. We
expressly disclaim any obligation to publicly update or revise our
Tyler's proposed acquisition of New World Systems is subject to
customary closing conditions; as such, there can be no assurance that
the acquisition will occur or that it will be successful.
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Jetstream PR for Tyler Technologies
Tony Katsulos, 972-788-9456,