Revenues up 14% year-over-year to a Quarterly Record $7.2 Million
Growth of ACH, PayFac and Prepaid driven by continued technological innovation
SAN ANTONIO, Aug. 14, 2019 (GLOBE NEWSWIRE) -- Usio, Inc. (Nasdaq: USIO), an integrated electronic payment solutions provider, today announced financial results for the second quarter of 2019, which ended June 30, 2019.
Louis Hoch, President and Chief Executive Officer of Usio, said, “Results for the second quarter reflect the strength of the broad FinTech platform we have built and the wide range of payment solutions we offer. Revenue growth accelerated modestly from the previous quarter, reflecting entirely organic growth and full integration of our previous acquisitions. Total dollars processed in the second quarter were $876 million. We experienced growth in all of our business segments, including nearly triple digit year-over-year growth within our prepaid card business line. ACH revenues were up as transaction volume continues to run at nearly double the rate of overall industry growth. This quarter we also recorded initial revenue from certain new products and incremental revenues from some of our other promising growth initiatives. Usio has a long history of technological innovation, and it is encouraging to see the investment in our growth initiatives taking root. We have maintained our financial strength, although the bottom line was impacted by continued investment in our growth initiatives. The new branding introduced at the July 1 Nasdaq Closing Bell ceremony represents the start of a new era at Usio, and we are confident that we will mark this historic occasion with a strong year of building shareholder value.”
Financial Results for Second Quarter Ended June 30, 2019
Revenues were $7.2 million for the second quarter, up 14% compared to the same period last year. Revenues were up in all of our business segments, ACH, card and prepaid.
Gross profits were $1.6 million, up 19% from $1.3 million in the same period last year and gross margins expanded to 21.9% in the second quarter, nearly a full point better than 21.0% in the same period last year.
Operating loss was $1.3 million for the quarter compared to a $1.0 million operating loss in the second quarter of last year.
Adjusted EBITDA was a loss of approximately $400,000, up marginally from a year ago.
Net loss for the quarter was $1.3 million, or ($0.10) per share, compared to a net loss of $1.0 million or ($0.09) per share in the same year ago period.
Total dollars processed in the quarter were up 7% to a quarterly record $876 million.
Usio continues to be in solid financial condition. Cash and cash equivalents at June 30, 2019 were $3.3 million and the Company remains debt free.
Financial Results for the First Six Months of Fiscal 2019
Revenues for the six months ended June 30, 2019 were $13.7 million, up 13.3% from the same period of fiscal 2018. All of the growth in fiscal 2019 is organic growth. Gross profits in the first six months of 2019 were $3.0 million, up 14% from the first half of fiscal 2018. Gross margins over the first half of this fiscal year were 21.5%, an improvement over gross margins for the first half of 2018 and driven by product mix. The operating loss for the first six months of 2019 was $2.3 million, compared to $2.1 million for the first six months of 2018. Adjusted EBITDA for the first six months of 2019 was a loss of $0.7 million, up just slightly from $0.5 million for the comparable period in 2018. The net loss for the six months ended June 30, 2019 was $2.3 million or ($0.18) per share compared to a net loss of $2.1 million or ($0.17) per share compared for the first half of 2018.
Conference Call and Webcast
Usio’s management will host a conference call with a live webcast on Wednesday, August 14, 2019 at 5:00 p.m. Eastern time to provide a business update. To listen to the conference call, interested parties within the U.S. should call 1-844-883-3890. International callers should call +1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the company’s websites: www.usio.com/invest.
A replay of the call will be available approximately one hour after the end of the call through August 28, 2019. The replay can be accessed via the Company’s website or by dialing 1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference playback code is 10133679.
About Usio, Inc.
Usio, Inc. (Nasdaq: USIO), 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 services 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. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas and Franklin, Tennessee, just outside of Nashville.
Websites: www.usio.com, www.singularpayments.com, www.payfacinabox.com, www.akimbocard.com, and www.ficentive.com. Find us on Facebook® and Twitter.
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."
FORWARD-LOOKING STATEMENTS DISCLAIMER
Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as "believe," "intend," "look forward," "anticipate," "schedule,” and "expect" among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company's business that could cause actual results to vary, including such risks related to the realization of the anticipated opportunities from the Singular acquisition, the management of the Company's growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new tax legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2018. One or more of these factors have affected, and in the future, could affect the Company’s businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes 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 the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.
Contact:
Joe Hassett, Investor Relations
joeh@gregoryfca.com
610-228-2110
USIO, INC.
CONSOLIDATED BALANCE SHEETS
| June 30, 2019 | December 31, 2018 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 3,276,511 | $ | 2,695,177 | |||
| Accounts receivable, net | 1,568,905 | 1,214,355 | |||||
| Settlement processing assets | 35,640,174 | 44,139,861 | |||||
| Prepaid expenses and other | 201,575 | 101,722 | |||||
| Note receivable, net | 108,750 | 108,750 | |||||
| Current assets before merchant reserves | 40,795,915 | 48,259,865 | |||||
| Merchant reserves | 11,074,891 | 12,645,803 | |||||
| Total current assets | 51,870,806 | 60,905,668 | |||||
| Property and equipment, net | 1,782,323 | 1,932,660 | |||||
| Other assets: | |||||||
| Intangibles, net | 3,176,427 | 3,676,427 | |||||
| Deferred tax asset | 1,394,000 | 1,394,000 | |||||
| Operating lease right-of-use assets | 2,614,006 | — | |||||
| Other assets | 312,780 | 306,757 | |||||
| Total other assets | 7,497,213 | 5,377,184 | |||||
| Total Assets | $ | 61,150,342 | $ | 68,215,512 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 239,325 | $ | 308,178 | |||
| Accrued expenses | 1,593,824 | 1,388,196 | |||||
| Operating lease liabilities, current portion | 246,758 | — | |||||
| Settlement processing obligations | 35,640,174 | 44,139,861 | |||||
| Deferred revenues | 150,000 | 20,000 | |||||
| Current liabilities before merchant reserve obligations | 37,870,081 | 45,856,235 | |||||
| Merchant reserve obligations | 11,074,891 | 12,645,803 | |||||
| Total current liabilities | 48,944,972 | 58,502,038 | |||||
| Non-current liabilities: | |||||||
| Operating lease liabilities, current portion | 2,519,276 | — | |||||
| Deferred rent | — | 79,748 | |||||
| Total liabilities | 51,464,248 | 58,581,786 | |||||
| Stockholders' equity: | |||||||
| Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at June 30, 2019 (unaudited) and December 31, 2018, respectively | — | — | |||||
| Common stock, $0.001 par value, 200,000,000 shares authorized; 18,008,577 and 17,129,680 issued, and 16,899,281 and 16,043,630 outstanding at June 30, 2019 (unaudited) and December 31, 2018, respectively | 186,439 | 185,561 | |||||
| Additional paid-in capital | 76,558,492 | 74,568,627 | |||||
| Treasury stock, at cost; 1,109,296 and 1,086,050 shares at June 30, 2019 (unaudited) and December 31, 2018, respectively | (1,864,061 | ) | (1,813,546 | ) | |||
| Deferred compensation | (5,810,035 | ) | (6,270,675 | ) | |||
| Accumulated deficit | (59,384,741 | ) | (57,036,241 | ) | |||
| Total stockholders' equity | 9,686,094 | 9,633,726 | |||||
| Total Liabilities and Stockholders' Equity | $ | 61,150,342 | $ | 68,215,512 | |||
USIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||||
| Revenues | $ | 7,157,379 | $ | 6,283,875 | $ | 13,745,411 | $ | 12,127,540 | |||||||||
| Cost of services | 5,591,534 | 4,964,260 | 10,843,835 | 9,537,018 | |||||||||||||
| Gross profit | 1,565,845 | 1,319,615 | 2,901,576 | 2,590,522 | |||||||||||||
| Selling, general and administrative: | |||||||||||||||||
| Stock-based compensation | 356,103 | 298,477 | 639,511 | 672,855 | |||||||||||||
| Other expenses | 1,970,555 | 1,595,276 | 3,632,294 | 3,093,927 | |||||||||||||
| Depreciation and amortization | 496,994 | 457,276 | 983,542 | 915,939 | |||||||||||||
| Total operating expenses | 2,823,652 | 2,351,029 | 5,255,347 | 4,682,721 | |||||||||||||
| Operating (loss) | (1,257,807 | ) | (1,031,414 | ) | (2,353,771 | ) | (2,092,199 | ) | |||||||||
| Other income: | |||||||||||||||||
| Interest income | 22,620 | 15,396 | 45,694 | 26,917 | |||||||||||||
| Other income (expense) | (424 | ) | (420 | ) | (423 | ) | (1,962 | ) | |||||||||
| Other income and (expense), net | 22,196 | 14,976 | 45,271 | 24,955 | |||||||||||||
| (Loss) before income taxes | (1,235,611 | ) | (1,016,438 | ) | (2,308,500 | ) | (2,067,244 | ) | |||||||||
| Income taxes | 40,000 | 19,000 | 40,000 | 19,000 | |||||||||||||
| Net (Loss) | $ | (1,275,611 | ) | $ | (1,035,438 | ) | $ | (2,348,500 | ) | $ | (2,086,244 | ) | |||||
| Earnings (Loss) Per Share | |||||||||||||||||
| Basic earnings (loss) per common share: | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.18 | ) | $ | (0.17 | ) | |||||
| Diluted earnings (loss) per common share: | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.18 | ) | $ | (0.17 | ) | |||||
| Weighted average common shares outstanding | |||||||||||||||||
| Basic | 13,041,799 | 12,075,580 | 12,831,828 | 12,124,538 | |||||||||||||
| Diluted | 13,041,799 | 12,075,580 | 12,831,828 | 12,124,538 | |||||||||||||
USIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six Months Ended | |||||||||
| June 30, 2019 | June 30, 2018 | ||||||||
| Operating Activities | |||||||||
| Net (loss) | $ | (2,348,500 | ) | $ | (2,086,244 | ) | |||
| Adjustments to reconcile net (loss) to net cash (used) by operating activities: | |||||||||
| Depreciation | 483,542 | 415,939 | |||||||
| Amortization | 500,000 | 500,001 | |||||||
| Provision for loss on note receivable | — | 72,500 | |||||||
| Non-cash stock-based compensation | 639,511 | 672,855 | |||||||
| Amortization of warrant costs | 17,970 | — | |||||||
| Issuance of stock to consultant for services | — | 7,911 | |||||||
| Changes in operating assets and liabilities: | |||||||||
| Accounts receivable | (354,550 | ) | 30,280 | ||||||
| Prepaid expenses and other | (99,853 | ) | (65,661 | ) | |||||
| Operating lease right-of-use assets | (2,614,006 | ) | — | ||||||
| Other assets | (6,023 | ) | (144,722 | ) | |||||
| Accounts payable and accrued expenses | 136,772 | (167,581 | ) | ||||||
| Operating lease liabilities | 2,766,034 | — | |||||||
| Merchant reserves | (1,570,912 | ) | (195,163 | ) | |||||
| Deferred revenue | 130,000 | 50,000 | |||||||
| Deferred rent | (79,748 | ) | 27,416 | ||||||
| Net cash (used) by operating activities | (2,399,763 | ) | (882,469 | ) | |||||
| Investing Activities | |||||||||
| Purchases of property and equipment | (333,205 | ) | (431,815 | ) | |||||
| Net cash (used) by investing activities | (333,205 | ) | (431,815 | ) | |||||
| Financing Activities | |||||||||
| Proceeds from public offering, net of expenses | 1,793,905 | — | |||||||
| Purchases of treasury stock | (50,515 | ) | (959,076 | ) | |||||
| Net cash provided (used) by financing activities | 1,743,390 | (959,076 | ) | ||||||
| Change in cash, cash equivalents and merchant reserves | (989,578 | ) | (2,273,360 | ) | |||||
| Cash, cash equivalents and merchant reserves, beginning of year | 15,340,980 | 19,778,022 | |||||||
| Cash, Cash Equivalents and Merchant Reserves, End of Period | $ | 14,351,402 | $ | 17,504,662 | |||||
| Supplemental disclosures of cash flow information | |||||||||
| Cash paid during the period for: | |||||||||
| Interest | $ | — | $ | — | |||||
| Income taxes | 72,081 | 49,000 | |||||||
USIO, INC.
STATEMENT OF CHANGES in STOCKHOLDERS' EQUITY
(UNAUDITED)
| Common Stock | |||||||||||||||||||||||||||
| Shares | Amount | Additional Paid-In Capital | Treasury Stock | Deferred Compensation | Accumulated Deficit | Total Stockholder's Equity | |||||||||||||||||||||
| Balance at December 31, 2018 | 17,129,680 | $ | 185,561 | $ | 74,568,627 | $ | (1,813,546 | ) | $ | (6,270,675 | ) | $ | (57,036,241 | ) | $ | 9,633,726 | |||||||||||
| Issuance of common stock, public offering | 769,230 | 769 | 1,793,136 | — | — | — | 1,793,905 | ||||||||||||||||||||
| Issuance of common stock under equity incentive plan | 62,222 | 62 | 58,551 | — | — | — | 58,613 | ||||||||||||||||||||
| Warrant compensation costs | — | — | 8,985 | — | — | — | 8,985 | ||||||||||||||||||||
| Deferred compensation amortization | — | — | — | — | 224,795 | — | 224,795 | ||||||||||||||||||||
| Purchase of treasury stock | — | — | — | (21,822 | ) | — | — | (21,822 | ) | ||||||||||||||||||
| Net (loss) for the period | — | — | — | — | — | (1,072,889 | ) | (1,072,889 | ) | ||||||||||||||||||
| Balance at March 31, 2019 | 17,961,132 | $ | 186,392 | $ | 76,429,299 | $ | (1,835,368 | ) | $ | (6,045,880 | ) | $ | (58,109,130 | ) | $ | 10,625,313 | |||||||||||
| Issuance of common stock under equity incentive plan | 53,445 | 53 | 133,462 | — | — | — | 133,515 | ||||||||||||||||||||
| Warrant compensation cost | — | — | 8,985 | — | — | — | 8,985 | ||||||||||||||||||||
| Deferred compensation amortization | — | — | — | — | 222,585 | — | 222,585 | ||||||||||||||||||||
| Reversal of deferred compensation that did not vest | (6,000 | ) | (6 | ) | (13,254 | ) | — | 13,260 | — | — | |||||||||||||||||
| Purchase of treasury stock | — | — | — | (28,693 | ) | — | — | (28,693 | ) | ||||||||||||||||||
| Net (loss) for the quarter | — | — | — | — | — | (1,275,611 | ) | (1,275,611 | ) | ||||||||||||||||||
| Balance at June 30, 2019 | 18,008,577 | $ | 186,439 | $ | 76,558,492 | $ | (1,864,061 | ) | $ | (5,810,035 | ) | $ | (59,384,741 | ) | $ | 9,686,094 | |||||||||||
| Balance at December 31, 2017 | 16,874,235 | $ | 186,299 | $ | 74,041,083 | $ | (831,059 | ) | $ | (7,012,544 | ) | $ | (53,260,426 | ) | $ | 13,123,353 | |||||||||||
| Issuance of common stock under equity incentive plan | 68,889 | 69 | 147,231 | — | — | — | 147,300 | ||||||||||||||||||||
| Deferred compensation amortization | — | — | — | — | 227,078 | — | 227,078 | ||||||||||||||||||||
| Purchase of treasury stock | — | — | — | (956,134 | ) | — | — | (956,134 | ) | ||||||||||||||||||
| Net (loss) for the period | — | — | — | — | — | (1,050,806 | ) | (1,050,806 | ) | ||||||||||||||||||
| Balance at March 31, 2018 | 16,943,124 | $ | 186,368 | $ | 74,188,314 | $ | (1,787,193 | ) | $ | (6,785,466 | ) | $ | (54,311,232 | ) | $ | 11,490,791 | |||||||||||
| Issuance of common stock under equity incentive plan | 28,223 | 28 | 74,319 | — | — | — | 74,347 | ||||||||||||||||||||
| Issuance of common stock, employees, restricted | 100,000 | 100 | 179,900 | — | (180,000 | ) | — | — | |||||||||||||||||||
| Issuance of common stock, restricted | 5,000 | 5 | 7,906 | — | — | — | 7,911 | ||||||||||||||||||||
| Deferred compensation amortization | — | — | — | — | 229,655 | — | 229,655 | ||||||||||||||||||||
| Reversal of deferred compensation that did not vest | (6,667 | ) | (1,000 | ) | (16,000 | ) | — | 11,475 | — | (5,525 | ) | ||||||||||||||||
| Purchase of treasury stock | — | — | — | (2,942 | ) | — | — | (2,942 | ) | ||||||||||||||||||
| Net (loss) for the quarter | — | — | — | — | — | (1,035,438 | ) | (1,035,438 | ) | ||||||||||||||||||
| Balance at June 30, 2018 | 17,069,680 | $ | 185,501 | $ | 74,434,439 | $ | (1,790,135 | ) | $ | (6,724,336 | ) | $ | (55,346,670 | ) | $ | 10,758,799 | |||||||||||
| USIO, INC | |||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | ||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
| Reconciliation from Operating (Loss) to Adjusted EBITDA: | |||||||||||||||||||
| Operating (Loss) | $ | (1,257,807 | ) | $ | (1,031,414 | ) | $ | (2,353,771 | ) | $ | (2,058,855 | ) | |||||||
| Depreciation and amortization | 496,994 | 457,276 | 983,542 | 915,939 | |||||||||||||||
| EBITDA | (760,813 | ) | (574,138 | ) | (1,370,229 | ) | (1,142,916 | ) | |||||||||||
| Non-cash stock-based compensation expense, net | 356,103 | 298,477 | 639,511 | 639,511 | |||||||||||||||
| Adjusted EBITDA | $ | (404,710 | ) | $ | (275,661 | ) | $ | (730,718 | ) | $ | (503,405 | ) | |||||||
| Calculation of Adjusted EBITDA margins: | |||||||||||||||||||
| Revenues | $ | 7,157,379 | $ | 6,283,875 | $ | 13,745,411 | $ | 12,127,540 | |||||||||||
| Adjusted EBITDA | (404,710 | ) | (275,661 | ) | (730,718 | ) | (503,405 | ) | |||||||||||
| Adjusted EBITDA margins | -5.7 | % | -4.4 | % | -5.3 | % | -4.2 | % | |||||||||||