Monett-based Jack Henry & Associates Inc. powered through the last three fiscal years, sustaining growth and making key investments.
The publicly traded company (Nasdaq: JKHY) creates integrated computer systems and processes automated teller machine and debit card transactions for banks and credit unions, with more than 11,300 customers nationwide.
Jack Henry reported 2011 revenues of $966.9 million, up nearly 16 percent from 2010 and 30 percent higher than in 2009.
Three acquisitions worth a combined $425 million were a primary driver of that growth, says Chief Financial Officer Kevin Williams.
“In our fiscal 2010, we did three of our largest acquisitions in the history of the company, which was a big part of it,” Williams said of the company’s three-year growth. Those purchases brought on board Elizabethtown, Ky.-based iPay Technologies LLC, Seattle-based Pemco Technologies and Atlanta-based Goldleaf Financial Solutions Inc.
Jack Henry grew its customer base to 11,200 from 9,100. Its core customers, bank and credit unions, make up 2,200 of that figure, with acquisitions fueling the growth, particularly for the company’s ProfitStars solutions. The ProfitStars brand, a division of Jack Henry, provides specialized products and services allowing companies to mitigate and control risks, optimize revenue and growth opportunities, and contain costs, according to
JackHenry.com.
“All three of those groups primarily went into the ProfitStars group, and that’s primarily where the significant amount of the increase in customers from 2009 came from,” Williams says. “We have a little more than 9,000 (customers using) one of our profit storage solutions.”
Jack Henry wasn’t immune to the effects of the recession, Williams says, particularly since the Federal Deposit Insurance Corp. has closed more than 400 banks in the last three and a half years.
“Twenty percent of the bank market is ours, and 20 percent of the banks that failed were ours. That’s probably one of the biggest challenges we’ve had in the last two or three years is just growing over that lost revenue,” Williams says.
Williams said banks and credit unions have started loosening their purse strings, a significant indicator for Jack Henry, since many financial institutions stopped spending on discretionary items during the recession.
Jack Henry’s fiscal year starts in July. Its fiscal 2011 results were solid, with net income increasing 16.6 percent to $137.47 million, compared to $117.87 million at the end of 2010.
For the three months ended Dec. 31, the company posted earnings per diluted share of 44 cents, a 2-cent increase compared to the same quarter of the prior year. Jack Henry shares hit a 52-week high of $35.37 Feb. 3, three days after the company released its second-quarter results.
“For the last fiscal year, for us to have experienced 6 percent organic growth, throwing over a pretty significant headwind from failed banks ... we felt pretty good about that,” Williams says.
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