National Research Corporation
Quarter Conference Call Talk Points*
For Quarter ending September 30, 2000 @ November 8, 2000
[*Points publicly disclosed in November 7, 2000 earnings release are omitted]
This conference call includes "Forward-looking" statements related to the
Company that involve risks and uncertainties which could cause actual results or
outcomes to differ materially from those currently anticipated. These
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. For further information
about the facts that could affect the Company's future results, please see the
Company's filings with the Securities and Exchange Commission.
o Revenue
Third quarter revenue of five million was higher than sequential quarters. Yet
less than our expectation and fell short of year over year comparisons. As we
all know Q3 99 was a tough quarter to beat given the backlog of work in the
first two quarters of 1999 that was completed in 3rd and 4th quarters of 1999
due to the QualPro failure in the first two quarters of 1999.
But nevertheless, we fell below our expectations. The mix and size of projects
we are being asked to bid on are much larger and more complex.
As a result we find ourselves in a more involved and longer sales cycle and the
implementation process after the sale has become longer. Larger contracts also
bring with them more competition and pricing pressure. Our closing rate has
remained the same in large part due to QualPro being a major point of
difference, at the point of sale. We have moved away from smaller commodity
projects such as NQCA accreditation type projects which have very low margins in
favor of projects that require the higher level of feature functionality
inherent in our QualPro system.
o Guidance - 4th Quarter of 2000
Now I would like to give guidance on the 4th quarter of 2000 followed by the
year 2001. I will give guidance on the revenue and earnings per share. In
addition, we will provide guidance on percent of revenue of the major line items
expenses.
For 4th quarter 2000
Revenue $4.3 million
Earnings per share $.10
Major Expense and other income items as a percent of revenue
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Item % of revenue
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Direct Expense 48.5 %
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Operating Expenses 29.4%
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Depreciation/Amortization 8.5%
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Other Income/Expense 2.0%
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Income Tax Rate 29%
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With this guidance for the 4th quarter of 2000 we are finishing out the year
with flat revenues but a 62% growth rate in the earnings per share over 1999.
o Guidance 2001
For the year 2001 by quarter without any new revenue for DoctorGuide, but the
fixed expenses of the DoctorGuide team.
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Item Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total for
the year
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Revenue (in Millions) $4.050 $4.675 $5.900 $5.650 $20.275
- --------------------------------------------------------------------------------
Earnings per share $.07 $.11 $.15 $.12 $.45
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We still believe that we will be able to generate $1.5 million of revenue for
the DoctorGuide in 2001. We believe that this revenue will generate an increase
in earnings per share of $.05. We currently cannot project the quarterly numbers
for the DoctorGuide.
Major Expense and other income items as a percent of revenue for 2001, without
DoctorGuide.
- --------------------------------------------------------------------------------
Item Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total for
the year
- --------------------------------------------------------------------------------
Direct Expense 50.0% 47.4% 49.7% 46.1% 48.2%
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Operating Expenses 33.2% 29.4% 24.9% 32.0% 29.6%
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Depreciation/ 11.3% 10.0% 8.0% 8.4% 9.2%
Amortization
- --------------------------------------------------------------------------------
Other Income/Expense 1.7% 1.8% 1.6% 1.8% 1.7%
- --------------------------------------------------------------------------------
Income Tax Rate 34% 34% 34% 34% 34%
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o Cash flow from operations for the nine months ended September 30, 2000 was
$1,678,000.