SAN ANTONIO, May 16, 2016 (GLOBE NEWSWIRE) -- Payment Data Systems, Inc. (NASDAQ:PYDS), an integrated payment solutions provider, today announced financial results for the first quarter ended March 31, 2016.
First Quarter 2016 Financial and Operating Summary
- Revenues were $3.2 million
- Gross margins were $1.1 million, or 33.3% of revenues
- Operating loss was $46,413
- Adjusted EBITDA1 was $465,499, or 14.4% of revenues
- Net loss was $32,002, or $0.00 per diluted share
- Total dollars processed for first quarter 2016 exceeded $737 million, compared to $797 million in the first quarter of 2015
- Credit card transaction processing volume and credit card dollars processed in the first quarter increased 6% and 5%, respectively, over the same time period in 2015
- ACH (Electronic check) transaction volumes decreased 11%; returned check transactions processed decreased 28% compared to the first quarter of 2015
Management Commentary
“While lower ACH volumes and a decrease in return check processing fees impacted our first quarter revenues, we continued to generate free cash flow from our ACH business, which we are using to invest in our technology and marketing platform,” said Louis Hoch, President and Chief Operating Officer of Payment Data Systems, Inc. “ACH processing continues to be our core business and we have a strong sales pipeline for new ACH, credit card and prepaid business that we expect will generate year-over-year revenue growth for us in the second half of 2016.
“Higher first quarter 2016 operating expenses as a percent of revenues reflect the expansion of our operating platform over the past year to support future growth,” Hoch continued. “On a sequential basis, we maintained our operating expenses at a similar level to the fourth quarter of 2015, and we expect to return to profitability in the second half of the year as our quarterly operating expenses remain consistent with first quarter levels and our revenues rebound.”
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1 See Reconciliation of GAAP Operating Income to Adjusted EBITDA in the accompanying financial tables.
Financial Results
Three Months Ended March 31, 2016
Revenues of $3.2 million decreased 13.7% compared to $3.7 million for the first quarter of 2015, due to a decrease in the volume of ACH processing transactions and return transactions processed, as well as customer attrition.
Gross margins were $1.1 million, or 33.3% of revenues, compared to $1.4 million, or 38.4% of revenues, in the corresponding prior-year period.
Operating loss was $46,413, compared to operating income of $694,721 in the first quarter of 2015, reflecting higher selling, general and administrative expenses, including higher non-cash compensation expense, to support the Company’s growth, and higher amortization expense related to the amortization of assets purchased from Akimbo.
Adjusted EBITDA was $465,499 compared to $849,887 in the corresponding prior-year period.
Net loss was $32,002, or $0.00 per share, compared to net income of $708,617, or $0.06 per diluted share in the first quarter of 2015.
Balance Sheet
At March 31, 2016, the Company had $4.2 million of cash and cash equivalents and zero debt on the balance sheet.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company's operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.
Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company's operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled "Non-GAAP Reconciliation."
Conference Call and Webcast
Payment Data Systems, Inc.’s management will host a conference call with a live webcast today at 5:00 p.m. Eastern Time to provide a business update.
Individuals interested in dialing in to the conference call may do so by dialing (877) 317-6789 for U.S. participants and (412) 317-6789 for participants outside the U.S., referencing “Payment Data Systems”. The call may also be accessed via webcast on the Company’s website at www.paymentdata.com/invest. If you would like to submit a question via email in advance please email ebrossy@finprofiles.com.
A replay of the call will be available through Monday, May 30th by dialing (877) 344-7529 (U.S.) or (412) 317-0088 (international), using the passcode 10085066.
About Payment Data Systems, Inc.
Payment Data Systems, Inc. (NASDAQ:PYDS), a leading integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, and card issuers. The Company operates credit, debit/prepaid and ACH payment processing platforms to deliver convenient, world-class payment solutions and service to their clients. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Payment Data Systems is headquartered in San Antonio, Texas, and has offices in New York, New York; and Long Beach, California.
For additional information please visit www.paymentdata.com. Websites: www.ficentive.com, www.akimbocard.com, www.streamprepaid.com, www.zbill.com. Find us on Facebook®
FORWARD-LOOKING STATEMENTS DISCLAIMER
Except for the historical information contained herein, the matters discussed in this release include certain forward-looking statements, which are intended to be covered by safe harbors. Those statements include, but may not be limited to, all statements regarding our management’s intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, the factors detailed from time to time in our filings with the Securities and Exchange Commission. One or more of these factors have affected, and in the future could affect our businesses and financial results in the future and could cause actual results to differ materially from plans and projections. We believe that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to our management. We assume no obligation to update any forward-looking statements, except as required by law.
(Financial Tables Follow)
| PAYMENT DATA SYSTEMS, INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| March 31, 2016 | December 31, 2015 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 4,223,891 | $ | 4,059,606 | |||
| Accounts receivable, net | 1,012,526 | 1,135,384 | |||||
| Settlement processing assets | 23,423,208 | 39,797,232 | |||||
| Prepaid expenses and other | 326,924 | 149,118 | |||||
| Current assets before restricted cash | 28,986,549 | 45,141,340 | |||||
| Restricted cash | 18,243,556 | 17,972,065 | |||||
| Total current assets | 47,230,105 | 63,113,405 | |||||
| Property and equipment, net | 3,001,935 | 3,077,421 | |||||
| Other assets: | |||||||
| Intangibles, net | 301,032 | 341,816 | |||||
| Deferred tax asset | 1,621,000 | 1,621,000 | |||||
| Note receivable | 200,000 | - | |||||
| Other assets | 202,250 | 202,849 | |||||
| Total other assets | 2,324,282 | 2,165,665 | |||||
| Total assets | $ | 52,556,322 | $ | 68,356,491 | |||
| Liabilities and stockholders’ equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 141,853 | $ | 143,180 | |||
| Accrued expenses | 1,345,245 | 1,328,738 | |||||
| Deferred revenues | 12,500 | - | |||||
| Settlement processing obligations | 23,423,208 | 39,797,232 | |||||
| Current liabilities before restricted cash | 24,922,806 | 41,269,150 | |||||
| Restricted cash | 18,243,556 | 17,972,065 | |||||
| Total current liabilities | 43,166,362 | 59,241,215 | |||||
| Stockholders’ equity: | |||||||
| Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at March 31, 2016 (unaudited) and December 31, 2015 | - | - | |||||
| Common stock, $0.001 par value, 200,000,000 shares authorized; 12,407,316 and 12,379,537 issued, and 12,057,684 and 12,029,905 outstanding at March 31, 2016 (unaudited) and December 31, 2015, respectively | 185,561 | 185,533 | |||||
| Additional paid-in capital | 64,379,182 | 64,302,498 | |||||
| Treasury stock, at cost; 349,632 and 349,632 shares | (286,394 | ) | (286,394 | ) | |||
| Deferred compensation | (5,801,387 | ) | (6,031,362 | ) | |||
| Accumulated deficit | (49,087,002 | ) | (49,054,999 | ) | |||
| Total stockholders’ equity | 9,389,960 | 9,115,276 | |||||
| Total liabilities and stockholders’ equity | $ | 52,556,322 | $ | 68,356,491 | |||
The accompanying notes to interim condensed consolidated financial statements in our Form 10-Q are an integral part of these financial statements.
| PAYMENT DATA SYSTEMS, INC. | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| (UNAUDITED) | |||||||
| Three Months Ended March 31, | |||||||
| 2016 | 2015 | ||||||
| Revenues | $ | 3,228,631 | $ | 3,742,460 | |||
| Operating expenses: | |||||||
| Cost of services | 2,154,783 | 2,303,999 | |||||
| Selling, general and administrative: | |||||||
| Stock-based compensation | 287,689 | 233,531 | |||||
| Cancellation of stock-based compensation | - | (163,936 | ) | ||||
| Other expenses | 608,349 | 588,574 | |||||
| Depreciation and amortization | 224,223 | 85,571 | |||||
| Total operating expenses | 3,275,044 | 3,047,739 | |||||
| Operating income | (46,413 | ) | 694,721 | ||||
| Other income and (expense): | |||||||
| Interest income | 22,011 | 19,000 | |||||
| Other income (expense) | (600 | ) | (104 | ) | |||
| Total other income and (expense), net | 21,411 | 18,896 | |||||
| Income (loss) before income taxes | (25,002 | ) | 713,617 | ||||
| Income taxes | 7,000 | 5,000 | |||||
| Net income (loss) | $ | (32,002 | ) | $ | 708,617 | ||
| Basic earnings per common share: | $ | 0.00 | $ | 0.10 | |||
| Diluted earnings per common share: | $ | 0.00 | $ | 0.06 | |||
| Weighted average common shares outstanding | |||||||
| Basic | 7,719,248 | 7,359,314 | |||||
| Diluted | 7,719,248 | 12,122,431 | |||||
The accompanying notes to interim condensed consolidated financial statements in our Form 10-Q are an integral part of these financial statements.
| PAYMENT DATA SYSTEMS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (UNAUDITED) | ||||||||
| Three months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Operating activities: | ||||||||
| Net income | $ | (32,002 | ) | $ | 708,617 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 183,437 | 75,651 | ||||||
| Amortization | 40,784 | 9,921 | ||||||
| Non-cash stock based compensation | 287,689 | 233,531 | ||||||
| Cancellation of stock based compensation | - | (163,936 | ) | |||||
| Issuance of stock to consultant | 19,000 | - | ||||||
| Changes in current assets and current liabilities: | ||||||||
| Accounts receivable | 122,858 | 125,377 | ||||||
| Prepaid expenses and other | (177,806 | ) | (111,126 | ) | ||||
| Other assets | 599 | (4,741 | ) | |||||
| Accounts payable and accrued expenses | 15,180 | (48,719 | ) | |||||
| Deferred revenues | 12,500 | - | ||||||
| Settlement processing assets, net | - | - | ||||||
| Net cash provided by operating activities: | 472,239 | 824,575 | ||||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (107,954 | ) | (253,933 | ) | ||||
| Note receivable | (200,000 | ) | - | |||||
| Net cash (used) by investing activities: | (307,954 | ) | (253,933 | ) | ||||
| Financing activities: | ||||||||
| - | - | |||||||
| Net cash (used) by financing activities: | - | - | ||||||
| Change in cash and cash equivalents | 164,285 | 570,641 | ||||||
| Cash and cash equivalents, beginning of period | 4,059,606 | 2,803,455 | ||||||
| Cash and cash equivalents, end of period | $ | 4,223,891 | $ | 3,374,096 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | - | - | ||||||
| Income taxes | $ | 7,000 | $ | 50,000 | ||||
The accompanying notes to interim condensed consolidated financial statements in our Form 10-Q are an integral part of these financial statements.
| Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||
| (In thousands) | |||||||||
| (Unaudited) | |||||||||
| Three Months Ended March 31, | |||||||||
| In thousands | 2016 | 2015 | |||||||
| Reconciliation from Operating Income to Adjusted EBITDA: | |||||||||
| Operating income | $ | (46,413 | ) | $ | 694,721 | ||||
| Depreciation and amortization | 224,223 | $ | 85,571 | ||||||
| EBITDA | 177,810 | 780,292 | |||||||
| Expenses related to NASDAQ uplisting and reverse stock split | - | - | |||||||
| Acquisition costs | - | - | |||||||
| Non-cash stock compensation expense (net) | 287,689 | 69,595 | |||||||
| Adjusted EBITDA | $ | 465,499 | $ | 849,887 | |||||
| Calculation of Adjusted EBITDA margins: | |||||||||
| Revenues | $ | 3,228,631 | $ | 3,742,460 | |||||
| Adjusted EBITDA | $ | 465,499 | $ | 849,887 | |||||
| Adjusted EBITDA margins | 14.4 | % | 22.7 | % | |||||