Supply Chain Subscription Revenue Increases Approximately 20% to Record Level
Announces Acquisition of ReposiTrak
SALT LAKE CITY, Feb. 5, 2015 (GLOBE NEWSWIRE) -- Park City Group (Nasdaq:PCYG), a cloud-based software company that uses big data management to help retailers and their suppliers "Sell more, Stock less and See everything", today announced financial results for its fiscal second quarter-ended December 31, 2014.
Strategic and financial highlights:
- Record core supply chain subscription revenue – Subscription revenue, net of ReposiTrak-related revenue, increased approximately 20% during the second quarter and 24% during first half of the fiscal year, both reaching record levels. "Our management team and staff are performing very well in delivering on our brand promise to help customers 'Sell more, Stock less and See everything', which is the central focus of our organization. We are proud of the fact that by delivering exceptional results for our customers, they are trusting us to help manage an even greater portion of their supply chain, which in turn, is directly translating into accelerating revenue growth of our supply chain subscription revenue," said Randall K. Fields, Park City Group's Chairman and CEO.
- Record subscription and record total revenue – For the quarter ended December 31, 2014, the Company posted year-over-year growth in subscription revenue of 16% and total revenue of 15%. Both subscription and total revenue reached record quarterly levels of $2.7 million and $3.5 million, respectively.
- Agreements to purchase ReposiTrak – The Company said that it has letters of intent and agreements to acquire that portion of the outstanding shares of ReposiTrak that are not subject to Park City Group's purchase option for a consideration of approximately 900,000 unregistered shares of Park City Group's common stock. Subject to certain closing conditions, including satisfactory completion of due diligence, the transactions are anticipated to close on or before July 1, 2015. "Given the increasing market acceptance of ReposiTrak as the industry standard for food safety compliance, coupled with opportunities to cross-sell services, we think the timing is right and have made the strategic decision to consolidate the two companies," said Mr. Fields. "Ownership under the same umbrella will also provide greater transparency and simplify how the food safety opportunity translates to Park City Group's shareholders."
A Subscription Revenue Growth chart is available here: http://media.globenewswire.com/cache/14562/file/31697.pdf
Total operating expenses during the quarter ended December 31, 2014 were $4.1 million, an increase of 13 percent from the same quarter a year ago, which was primarily related to increases in sales and marketing expenses. For the first half of the fiscal year, operating expenses increased six percent year over year, and are still expected to increase no more than 5% to 7% for the full fiscal year. Non-GAAP income per share to common shareholders for the third quarter was $0.01 per share, as compared to a net loss per share of ($0.01) during the same period last year. GAAP net loss per share to common shareholders for the third quarter was ($0.04) per share, unchanged from the prior year.
For the first half of fiscal 2015, the Company generated $545,000 in free cash flow, as compared to a negative $895,000 in free cash flow during the same period a year ago, which was a $1.4 million improvement. Adjusted EBITDA increased 94% to $394,000 year over year. Total cash at the end of December 31, 2014 was $2.3 million as compared to $3.4 million at June 30, 2014, and debt levels decreased to $1.7 million, versus $1.9 million at June 30, 2014. The company said that it expects to be a cash flow generator during the balance of its fiscal 2015, and believes that internally generated cash flow and its net cash position are adequate to fund growth plans.
"While the majority of incremental revenue growth during the first half of the year is coming from existing customers, we expect to add several new growth drivers to our core supply chain services business this year in the form of new categories and new channel partnerships. Combined with sustainable growth from our existing customers, our top line growth should continue to accelerate over the next several years. While we will continue to invest in sales and marketing, we continue to expect that the rate of revenue growth will significantly outpace the growth in costs," said Mr. Fields.
ReposiTrak® highlights: ReposiTrak, the Company's venture with Leavitt Partners, provides food and drug retailers and their suppliers with a cost-effective service to help protect their brands, and reduce regulatory and financial risk associated with the rapidly evolving Food Safety Modernization Act.
- Connection growth on target – Currently with 1,500 connections, ReposiTrak is on track to achieve its stated goal of 2,000 supplier connections by mid-2015. Through registration and procedural enhancements, ReposiTrak's ability to on board connections was significantly enhanced during the past several months, leading to a faster pace of growth. In addition, its pipeline of wholesalers, grocers and suppliers continues to accelerate rapidly as food industry participants begin to focus on the "Sarbanes-Oxley-like" consequences of non-compliance with new industry regulation from the Food Safety Modernization Act, which is scheduled to be implemented during 2015.
- Accelerating adoption – During the quarter, the seventh member of the Retailer Owned Food Distributors & Associates (ROFDA), a cooperative of 13 wholesale members that represent 20% of the supermarket industry, has chosen ReposiTrak to help manage their food safety-related risk. In addition, other wholesalers, retailers and food manufactures are also increasingly deploying ReposiTrak to manage food-safety risk in their supply chains.
"Simply put: ReposiTrak is not only rapidly growing, but more importantly, it works remarkably well. Compliance has improved markedly for customers that have signed up for ReposiTrak service, and based on the increase of in-bound inquiries, word is beginning to spread among other industry participants about ReposiTrak's efficacy, cost effectiveness and ease of use. Combined with the endorsements of two of the leading food and grocery industry organizations, ReposiTrak is rapidly becoming the standard for Food Safety," said Mr. Fields.
The Company will host a conference call at 4:15 P.M. Eastern today, February 5, 2015, to discuss the results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 63059855. The conference call is also being webcast and is available via the investor relations section of the Company's website, www.parkcitygroup.com.
About Park City Group
Park City Group (Nasdaq:PCYG) is a Software-as-a-Service ("SaaS") provider that brings unique visibility to the consumer goods supply chain, delivering actionable information that ensures product is on the shelf when the consumer expects it to be. Park City Group's services enable customers to "Sell More, Stock Less, and See Everything". More information is available at www.parkcitygroup.com
About ReposiTrak
ReposiTrak is a venture between Leavitt Partners and Park City Group. ReposiTrak provides food retailers and suppliers with a robust solution to help protect their brands and remain in compliance with rapidly evolving regulations in the Food Safety Modernization Act. Powered by Park City Group's technology, the ReposiTrak® solution is internet-based and enables all participants in the farm-to-shelf supply chain easily manage both document management and tracking and traceability requirements as products move between trading partners. More information is available at www.repositrak.com.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission: non-GAAP EBITDA, non-GAAP earnings per share, net debt and free cash flow. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company's annual audit.
Non-GAAP EBITDA excludes items such as impairment charges, allowance for doubtful accounts, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. Net debt is the total debt balance less the cash balance. Free cash flow includes net cash provided (used) by operating activities less replacement purchases of property and equipment. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook. In addition, because Park City Group has historically reported certain non-GAAP results to investors, the Company believes that the inclusion of non-GAAP measures provides consistency in the Company's financial reporting.
Forward-Looking Statement
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "if", "should" and "will" and similar expressions as they relate to Park City Group, Inc. ("Park City Group") are intended to identify such forward-looking statements. Park City Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see "Risk Factors" in Park City's annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.
| PARK CITY GROUP, INC. | ||
| Consolidated Condensed Balance Sheets | ||
| December 31, | June 30, | |
| 2014 | 2014 | |
| Assets | (unaudited) | |
| Current assets: | ||
| Cash and cash equivalents | $ 2,312,943 | $ 3,352,559 |
| Receivables, net of allowance of $60,000 and $70,000 at December 31, 2014 and June 30, 2014, respectively | 3,002,000 | 2,857,983 |
| Prepaid expenses and other current assets | 350,913 | 250,855 |
| Total current assets | 5,665,856 | 6,461,397 |
| Property and equipment, net | 926,317 | 740,753 |
| Other assets: | ||
| Deposits and other assets | 14,866 | 14,866 |
| Note receivable | 4,187,771 | 2,996,664 |
| Customer relationships | 1,706,861 | 1,918,019 |
| Goodwill | 4,805,933 | 4,805,933 |
| Total other assets | 10,715,431 | 9,735,482 |
| Total assets | $ 17,307,604 | $ 16,937,632 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 935,666 | $ 738,289 |
| Accrued liabilities | 1,891,980 | 1,801,355 |
| Deferred revenue | 1,807,620 | 1,840,811 |
| Line of credit | 1,200,000 | 1,200,000 |
| Notes payable | 171,104 | 226,900 |
| Total current liabilities | 6,006,370 | 5,807,355 |
| Long-term liabilities: | ||
| Notes payable, less current portion | 338,328 | 422,248 |
| Other long-term liabilities | 83,211 | 88,948 |
| Total liabilities | 6,427,909 | 6,318,551 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Series B Convertible Preferred Stock, $0.01 par value, 30,000,000 shares authorized; 411,927 shares issued and outstanding at December 31, 2014 and June 30, 2014. | 4,119 | 4,119 |
| Common Stock, $0.01 par value, 50,000,000 shares authorized; 17,234,168 and 16,928,025 shares issued and outstanding at December 31, 2014 and June 30, 2014, respectively | 172,342 | 169,280 |
| Additional paid-in capital | 48,276,173 | 46,792,736 |
| Accumulated deficit | (37,572,939) | (36,347,054) |
| Total stockholders' equity | 10,879,695 | 10,619,081 |
| Total liabilities and stockholders' equity | $ 17,307,604 | $ 16,937,632 |
| See accompanying notes to consolidated condensed financial statements. | ||
| PARK CITY GROUP, INC. | ||||
| Consolidated Condensed Statements of Operations (unaudited) | ||||
| Three Months Ended | Six Months Ended | |||
| December 31, | December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Revenues: | ||||
| Subscription | $ 2,721,427 | $ 2,344,178 | $ 5,358,511 | $ 4,478,834 |
| Other Revenue | 758,577 | 675,436 | 1,455,012 | 1,316,716 |
| Total revenues | 3,480,004 | 3,019,614 | 6,813,523 | 5,795,550 |
| Operating expenses: | ||||
| Cost of services and product support | 1,355,404 | 1,246,443 | 2,703,783 | 2,455,546 |
| Sales and marketing | 1,534,396 | 1,129,832 | 2,871,831 | 2,369,475 |
| General and administrative | 986,930 | 979,144 | 1,881,902 | 2,127,617 |
| Depreciation and amortization | 187,364 | 240,727 | 374,759 | 468,302 |
| Total operating expenses | 4,064,094 | 3,596,146 | 7,832,275 | 7,420,940 |
| Income (loss) from operations | (584,090) | (576,532) | (1,018,752) | (1,625,390) |
| Other income (expense): | ||||
| Interest income (expense) | 43,214 | 26,447 | 101,813 | 27,940 |
| Income (loss) before income taxes | (540,876) | (550,085) | (916,939) | (1,597,450) |
| (Provision) benefit for income taxes: | -- | -- | -- | -- |
| Net income (loss) | (540,876) | (550,085) | (916,939) | (1,597,450) |
| Dividends on preferred stock | (154,473) | (154,473) | (308,946) | (308,946) |
| Net income (loss) applicable to common shareholders | $ (695,349) | $ (704,558) | $ (1,225,885) | $ (1,906,396) |
| Weighted average shares, basic and diluted | 17,193,000 | 16,693,000 | 17,141,000 | 16,529,000 |
| Basic and diluted loss per share | $ (0.04) | $ (0.04) | $ (0.07) | $ (0.12) |
| See accompanying notes to consolidated condensed financial statements. | ||||
| PARK CITY GROUP, INC. | ||
| Consolidated Condensed Statements of Cash Flows (Unaudited) | ||
| Six Months Ended | ||
| December 31, | ||
| 2014 | 2013 | |
| Cash Flows From Operating Activities: | ||
| Net loss | $ (916,939) | $ (1,597,450) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||
| Depreciation and amortization | 374,759 | 468,302 |
| Stock issued for charitable contribution | -- | 96,900 |
| Stock compensation expense | 1,249,835 | 855,190 |
| Bad debt expense | 92,097 | 60,008 |
| (Increase) decrease in: | ||
| Receivables | (236,114) | (581,276) |
| Prepaids and other assets | (231,705) | 39,155 |
| (Decrease) increase in: | ||
| Accounts payable | 197,377 | 44,970 |
| Accrued liabilities | 68,665 | 50,375 |
| Deferred revenue | (33,191) | (94,105) |
| Net cash provided by (used in) operating activities | 564,784 | (657,931) |
| Cash Flows From Investing Activities: | ||
| Cash from sales of property and equipment | -- | 6,505 |
| Cash advanced on note receivable | (1,059,460) | (400,000) |
| Purchase of property and equipment | (349,165) | (365,151) |
| Net cash used in investing activities | (1,408,625) | (758,646) |
| Cash Flows From Financing Activities: | ||
| Proceeds from employee stock plans | 98,414 | 62,134 |
| Proceeds from issuance of note payable | 8,213 | 278,290 |
| Proceeds from issuance of stock | -- | 1,493,818 |
| Proceeds from exercise of options and warrants | -- | 436,296 |
| Payments on notes payable | (147,929) | (333,042) |
| Dividends paid | (154,473) | (278,051) |
| Net cash provided by financing activities | (195,775) | 1,659,443 |
| Net (decrease) increase in cash and cash equivalents | (1,039,616) | 242,866 |
| Cash and cash equivalents at beginning of period | 3,352,559 | 3,616,585 |
| Cash and cash equivalents at end of period | $ 2,312,943 | $ 3,859,451 |
| Supplemental Disclosure of Cash Flow Information: | ||
| Cash paid for income taxes | $ -- | $ 6,500 |
| Cash paid for interest | $ 39,701 | $ 50,771 |
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
| Common stock to pay accrued liabilities | $ 1,388,085 | $ 633,725 |
| Dividends accrued on preferred stock | $ 308,946 | $ 308,946 |
| Dividends paid with preferred stock | $ -- | $ -- |
| See accompanying notes to consolidated condensed financial statements. | ||
| PARK CITY GROUP, INC. AND SUBSIDIARIES | ||||
| Reconciliation of GAAP and Non-GAAP Financial Measures | ||||
| Adjusted EBITDA | ||||
| (In $000's) | ||||
|
Three Months Ended December 31, |
Six Months Ended December 31, |
|||
| 2014 | 2013 | 2014 | 2013 | |
| Net Income (loss) | $ (541) | $ (550) | $ (917) | $ (1,597) |
| Adjusted EBITDA Reconciliation Adjustments: | ||||
| Depreciation and amortization | 187 | 241 | 375 | 468 |
| Bad debt expense | 85 | 60 | 92 | 60 |
| Interest, net | (43) | (27) | (102) | (28) |
| Stock based compensation | 706 | 479 | 1,250 | 855 |
| Adjusted EBITDA | $ 394 | $ 203 | $ 698 | $ (242) |
| Non-GAAP Net Income (Loss) to Common Shareholders and EPS | ||||
| (In $000's, except per share) | ||||
|
Three Months Ended December 31, |
Six Months Ended December 31, |
|||
| 2014 | 2013 | 2014 | 2013 | |
| Net Income (loss) | $ (541) | $ (550) | $ (917) | $ (1,597) |
| Non-GAAP Net Income (Loss) Reconciliation Adjustments: | ||||
| Stock based compensation | 706 | 479 | 1,250 | 855 |
| Acquisition related amortization | 106 | 126 | 212 | 252 |
| Non-GAAP Net Income | $ 271 | $ 55 | $ 545 | $ (490) |
| Preferred dividends | (154) | (154) | (309) | (309) |
| Non-GAAP Net Income to Common Shareholders | $ 117 | $ (99) | $ 236 | $ (799) |
| Weighted average shares, diluted | 17,193,000 | 16,693,000 | 17,141,000 | 16,529,000 |
| Non-GAAP EPS, diluted | $ 0.01 | $ (0.01) | $ 0.01 | $ (0.05) |
| Non-GAAP Free Cash Flow | ||||
| (In $000's) | ||||
|
Three Months Ended December 31, |
Six Months Ended December 31, |
|||
| 2014 | 2013 | 2014 | 2013 | |
| Net Cash Provided by Operating Activities | $ 77 | $ (48) | $ 565 | $ (658) |
| Non-GAAP Free Cash Flow Reconciliation Adjustments: | ||||
| Purchase of property and equipment | (11) | (170) | (20) | (237) |
| Non-GAAP Free Cash Flow | $ 66 | $ (218) | $ 545 | $ (895) |
Free cash flow includes net cash provided (used) by operating activities less replacement purchases of property and equipment. Capital expenditures related to long-term investments and new technology developments are omitted.
