UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 1, 2018
CASS INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| Missouri | 000-20827 | 43-1265338 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 12444 Powerscourt Drive, Suite 550 St. Louis, Missouri |
63131 | |
| (Address of principal executive offices) | (Zip Code) |
(314) 506-5500
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act. |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act. |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
On February 1, 2018, Cass Information Systems, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 2017. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information reported under this Item 2.02 of Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 8.01. | Other Events. |
Also on February 1, 2018, the Company announced that its Board of Directors declared a first quarter dividend of $.24 per share payable on March 15, 2018 to shareholders of record on March 5, 2018.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit Number |
Description | |
| 99.1 | Press release issued by Cass Information Systems, Inc. dated February 1, 2018. | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 1, 2018
| CASS INFORMATION SYSTEMS, INC. | ||||||
| By: | /s/ Eric H. Brunngraber | |||||
| Name: | Eric H. Brunngraber | |||||
| Title: | Chairman, President and Chief Executive Officer | |||||
| By: | /s/ P. Stephen Appelbaum | |||||
| Name: | P. Stephen Appelbaum | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
3
Exhibit 99.1
Contact: Contact Kenn Entringer at Casey Communications, Inc., (314) 721-2828.
kentringer@caseycomm.com
February 1, 2018
Cass Information Systems, Inc.
Records All-Time High Earnings in 2017
Q4 Revenues Up 9%; Full-Year Earnings Up 3% Despite Large One-Time, Non-Cash TCJA Charge
ST. LOUIS – Cass Information Systems, Inc. (NASDAQ: CASS), the nation’s leading provider of transportation, energy, telecom and waste invoice payment and information services, today announced fourth quarter and full year 2017 earnings.
Those results (detailed in the table below) are skewed by a one-time, non-cash charge to income tax expense of $1.8 million triggered by the passage of the Tax Cuts and Jobs Act (TCJA) on December 22, 2017. While the reduction in the federal corporate tax rate negatively impacted 2017 earnings, the rate reduction is projected to significantly boost after-tax earnings in the future.
The table that follows presents key 2017 fourth quarter and full-year performance metrics. Net Income and Diluted EPS (earnings per share) show comparative entries that reflect the impact of the TCJA one-time non-cash charge. None of the other metrics were impacted by the charge.
|
4th Quarter |
% |
YTD |
% | |||||||||
| 2017 |
2016 |
2017 |
2016 |
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| Transportation Invoice Volume |
9.0 million | 8.6 million | 4.6 | 35.5 million | 34.3 million | 3.5 | ||||||
| Transportation Dollar Volume |
$6.5 billion | $5.7 billion | 15.2 | $24.8 billion | $22.8 billion | 8.9 | ||||||
| Facility Expense Transaction Volume* |
7.2 million | 6.6 million | 9.6 | 27.7 million | 23.5 million | 17.5 | ||||||
| Facility Expense Dollar Volume* |
$3.1 billion | $3.0 billion | 3.8 | $12.8 billion | $11.9 billion | 7.4 | ||||||
| Revenues |
$35.0 million | $32.2 million | 8.9 | $135.3 million | $125.5 million | 7.8 | ||||||
| Net Income |
$5.3 million | $6.4 million | (17.0) | $25.0 million | $24.3 million | 2.7 | ||||||
| Net Income (excluding TCJA charge) |
$7.2 million** | $6.4 million | 11.4 | $26.8 million** | $24.3 million | 10.2 | ||||||
| Diluted EPS |
$.43 | $.52 | (17.3) | $2.01 | $1.96 | 2.6 | ||||||
| Diluted EPS (excluding TCJA charge) |
$.58** | $.52 | 11.5 | $2.16** | $1.96 | 10.2 | ||||||
| * | Includes Energy, Telecom and Waste |
| ** | Non-GAAP |
2017 Q4 Revenue Up 9%
Cass posted a healthy 9% increase in revenue in the fourth quarter as it continued to grow its customer base, expanded new revenue-generating services and benefitted from an improving interest rate environment. The company continued to foster service innovation with investment in new technology and infrastructure.
Highlighting fourth quarter performance was a 15% increase in transportation dollar volume. Against the backdrop of a strengthening global economy, increased carrier and fuel prices combined with higher volume from current accounts to produce the notable result. Transportation invoice volume was also up 5% for the period.
Facility-related (electricity, gas, waste, and telecom expense management) transactions increased 10% due to new customer wins and increased volume from current accounts. Facility expense dollar volume grew by 4% for the period.
Consolidated operating expenses were up $2.2 million (9%) due mainly to on-going strategic investment in the technology and staff required to win and support new business.
“We are delighted that 2017 proved to be another record-setting year for Cass, despite our need to absorb the significant accounting charge generated by federal tax reform legislation,” stated Eric H. Brunngraber, Cass chairman and chief executive officer. “Excluding that charge, Cass achieved a 10.2%* increase in net income and earnings per share for 2017.”
*Non-GAAP
Cash Dividend Declared
On January 30, 2018, the company’s board of directors declared a first quarter dividend of $.24 per share payable March 15, 2018 to shareholders of record March 5, 2018. Cass has continuously paid regularly scheduled cash dividends since 1934. Additionally, Cass has returned more than $22 million to shareholders over the past three years through its share repurchase program.
“The positive impact on future earnings from tax reform combined with our strong balance sheet and sound operating performance leave our board of directors upbeat about what the future holds for Cass,” Brunngraber commented.
About Cass Information Systems
Cass Information Systems, Inc. is a leading provider of integrated information and payment management solutions. Cass enables enterprises to achieve visibility, control and efficiency in their supply chains, communications networks, facilities and other operations. Disbursing over $50 billion annually on behalf of clients, and with total assets of $1.6 billion, Cass is uniquely supported by Cass Commercial Bank. Founded in 1906 and a wholly owned subsidiary, Cass Bank provides sophisticated financial exchange services to the parent organization and its clients. Cass is part of the Russell 2000®. More information is available at www.cassinfo.com.
Note to Investors
Certain matters set forth in this news release may contain forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. For a discussion of certain factors that may cause such forward-looking statements to differ materially from the company’s actual results, see the company’s reports filed from time to time with the Securities and Exchange Commission including the company’s annual report on Form 10-K for the year ended December 31, 2016.
Selected Consolidated Financial Data
The following table presents selected unaudited consolidated financial data (in thousands, except per share data) for the periods ended December 31, 2017 and 2016:
| Quarter Ended December 31, 2017 |
Quarter Ended December 31, 2016 |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
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| Transportation Invoice Volume |
8,961 | 8,566 | 35,546 | 34,352 | ||||||||||||
| Transportation Dollar Volume |
$ | 6,530,555 | $ | 5,667,186 | $ | 24,801,733 | $ | 22,774,909 | ||||||||
| Facility Expense Transaction Volume |
7,184 | 6,556 | 27,661 | 23,545 | ||||||||||||
| Facility Expense Dollar Volume |
$ | 3,147,729 | $ | 3,032,178 | $ | 12,795,302 | $ | 11,914,359 | ||||||||
| Payment and Processing Fees |
$ | 23,990 | $ | 21,551 | $ | 93,322 | $ | 83,713 | ||||||||
| Net Investment Income |
10,315 | 10,151 | 39,790 | 39,401 | ||||||||||||
| Gain on Sales of Securities |
— | — | — | 387 | ||||||||||||
| Other |
744 | 475 | 2,190 | 2,036 | ||||||||||||
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| Total Revenues |
$ | 35,049 | $ | 32,177 | $ | 135,302 | $ | 125,537 | ||||||||
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| Personnel |
$ | 19,955 | $ | 18,314 | $ | 77,339 | $ | 72,581 | ||||||||
| Occupancy |
846 | 830 | 3,480 | 3,390 | ||||||||||||
| Equipment |
1,325 | 1,162 | 5,071 | 4,451 | ||||||||||||
| Other |
4,016 | 3,641 | 14,513 | 13,051 | ||||||||||||
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| Total Operating Expenses |
$ | 26,142 | $ | 23,947 | $ | 100,403 | $ | 93,473 | ||||||||
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| Income from Operations before Income Taxes |
$ | 8,907 | $ | 8,230 | $ | 34,899 | $ | 32,064 | ||||||||
| Income Tax Expense |
3,576 | * | 1,806 | 9,885 | * | 7,716 | ||||||||||
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| Net Income |
$ | 5,331 | $ | 6,424 | $ | 25,014 | $ | 24,348 | ||||||||
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| Basic Earnings per Share |
$ | .44 | $ | .53 | $ | 2.04 | $ | 1.99 | ||||||||
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| Diluted Earnings per Share |
$ | .43 | $ | .52 | $ | 2.01 | $ | 1.96 | ||||||||
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| Average Earning Assets |
$ | 1,405,413 | $ | 1,331,652 | $ | 1,362,661 | $ | 1,308,914 | ||||||||
| Net Interest Margin |
3.31 | % | 3.30 | % | 3.34 | % | 3.32 | % | ||||||||
| Allowance for Loan Losses to Loans |
1.49 | % | 1.53 | % | 1.49 | % | 1.53 | % | ||||||||
| Non-performing Loans to Total Loans |
— | .04 | % | — | .04 | % | ||||||||||
| Net Loan (Recoveries) / Charge-offs to Loans |
— | — | — | (.01 | %) | |||||||||||
| Provision for Loan Losses |
$ | — | $ | (500 | ) | $ | — | $ | (1,500 | ) | ||||||
| * | Includes one-time, non-cash TCJA charge of $1,824 |