Park City Group Reports Fiscal First Quarter 2017 Results

Food Safety Catalyst for Record 36% Year-Over-Year Revenue Growth
Record Profitability Demonstrates Inherent Leverage of Business Model
Results Reflect Continued Acceleration Across the Business

SALT LAKE CITY, Nov. 07, 2016 (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 results for its fiscal first quarter ended September 30, 2016.

Strategic and Financial Highlights:

  • Fiscal first quarter revenue increased 36% year-over-year, exceeding $4 million for the first time. “We continue to see acceleration in revenue growth, driven by stronger momentum at ReposiTrak,” said Randall K. Fields, Park City Group’s Chairman and CEO. “This was Park City Group’s largest revenue quarter ever. Total revenue for the quarter was a record $4.2 million, an increase of 36% year-over-year, which was also the highest quarterly growth rate in our history.”

  • Record net income was $614,000 in the fiscal first quarter, or 15% of total revenue. “First quarter’s net income exceeded our expectations, and at $614,000, was nearly equal to net income in all of fiscal 2016. Net income margin expanded to its highest level ever of 15%, which demonstrates the strong incremental contribution margin inherent in our business model,” said Mr. Fields.

  • Fiscal first quarter results reflected continued acceleration in ReposiTrak momentum. “During the quarter, we were chosen as the food safety solution by several of the industry’s most influential players. As a result, we now have 31 ReposiTrak Hubs, up from 15 a year ago. Our success improving food safety compliance for our customers continues to be excellent. Our obsession with customer success continues to be the driver of our own success.”

  • Growing customer network and accelerating connections reflect strengthening industry position. “First quarter’s growth shows that ReposiTrak is increasingly becoming the dominant Food Safety platform,” said Mr. Fields. “We officially announced our integration with SQFI, the leading standard in food safety auditing, increasing our credibility and extending our capabilities.

  • Strong demand for supply-chain services is also contributing to record revenue growth. “Our strategy to converge the two businesses has created greater opportunities with many of our Hubs. As a result, demand for our supply-chain services is getting even stronger. Importantly, several of our fastest growing supply-chain Hubs are also our largest,” said Mr. Fields.

  • Outlook for continued positive financial momentum in fiscal 2017. “We remain confident revenue growth in fiscal 2017 will be the highest ever, and that profitability will scale materially. We anticipate adding 12-15 new Hubs in fiscal 2017, and now believe that our goal of doubling supplier connections could prove to be conservative,” said Mr. Fields. “Expense growth is controlled, giving us confidence in our ability to generate double-digit net income margins and significant cash flow.”

Financial Results Summary:

Fiscal First Quarter Results: Total revenue rose 36% to $4.22 million for the three months ended September 30, 2016, from $3.10 million a year ago. Total operating expenses during the quarter were $3.54 million, a 1% increase from $3.52 million a year ago. As a result, net income was $614,000, versus a loss of $407,000 a year ago. Net income to common shareholders was $428,000, or $0.02 per common share, as compared to a loss of $607,000, or ($0.03) per share, a year ago. The Company ended the fiscal first quarter of 2017 with $11.4 million in cash and cash equivalents.

Conference Call:

The Company will host a conference call at 4:15 P.M. Eastern today, November 7, 2016 to discuss the results. Investors and interested parties may participate in the call by dialing 1-888-437-9274 and referring to Conference ID: 9228508. 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 (PCYG) is a Software-as-a-Service ("SaaS") provider that brings unique visibility to the consumer goods supply chain, delivering actionable information to ensure products are available when and where consumers demand them. Park City Group’s technology also assists all participants in the food and drug supply chains to comply with food and drug safety regulations through the Company’s ReposiTrak subsidiary. More information is available at www.parkcitygroup.com and www.repositrak.com.

Specific disclosure relating to the acquisition of ReposiTrak, including management’s analysis of results from operations and financial condition, are contained in the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2016 and other reports filed with the Securities and Exchange Commission. Investors are encouraged to read and consider such disclosure and analysis contained in the Company’s Form 10-Q and other reports, including the risk factors contained in the Form 10-Q.

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. 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 financial reporting.

In addition to reporting financial measures on a GAAP and non-GAAP basis, management has elected to disclose certain financial measures on a pro-forma basis because it believes this pro-forma comparison is more appropriate to its current accounting treatment for the business. The pro-forma financial results of the Company presented in this release reflect the elimination of Park City Group’s historical accounting treatment of ReposiTrak as a customer of the Company and present the Company’s prior financial results as if ReposiTrak were a wholly-owned subsidiary of the Company.

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.
INCOME STATEMENT
3 Months Ended
FY ENDS June 9/30/2016 9/30/2015 % Change
Total Revenues $ 4,216,545 $ 3,098,631 36 %
Operating Expenses
Cost of Services and Product Support 1,203,515 1,174,546 2%
Sales and Marketing 1,193,176 1,442,572 (17%)
General and Administrative 1,023,150 772,494 32%
Depreciation and Amortization 116,580 129,098 (10%)
Goodwill Writeoff
Total Operating Expenses 3,536,421 3,518,710 1%
Income (Loss) from Operations $680,124 ($420,079) NM
Other Income (Expenses)
Interest Income (Expenses) (6,487) 17,623 NM
Income (Loss) Before Taxes 673,637 (402,456) NM
(Provision) Benefit for Taxes (59,184) (4,836) -
Net Income (Loss) 614,453 (407,292) NM
Dividends on Preferred Stock (186,804) (199,388) (6%)
Net Income (Loss) to Common Shareholders $427,649 $(606,680) NM
GAAP EPS $0.02 $(0.03) NM
Weighted Average Shares, Basic 19,266,000 19,042,000
Park City Group, Inc.
RECONCILIATION OF NON-GAAP ITEMS
3 Months Ended
FY ENDS June 9/30/2016 9/30/2015 % Change
Net Income (Loss) $614,453 $(407,292) NM
Adjustments:
Depreciation and Amortization 116,580 129,098 (10%)
Bad Debt Expense 80,700 33,576 140%
Interest Income (Expenses) 6,487 (17,623) NM
Stock Compensation Expense 239,056 261,833 (9%)
Adjusted EBITDA $1,057,276 $(408) NM
Net Income (Loss) $614,453 $(407,292) NM
Adjustments:
Stock Compensation Expense 239,056 261,833 (9%)
Acquisition Related Amortization 32,850 32,850 -
Adjusted non-GAAP Net Income (Loss) 886,359 (112,609) NM
Dividends on Preferred Stock (186,804) (199,388) (6%)
Adjusted non-GAAP Net Income (Loss)
to Common Shareholders $699,555 $(311,997) NM
Adjusted Non-GAAP EPS $ 0.04 $ (0.02) NM
Weighted Average Shares, Basic 19,266,000 19,042,000
Park City Group, Inc.
CONSOLIDATED BALANCE SHEET
Quarter Ended
FY ENDS June 9/30/2016 6/30/2016
Assets
Current Assets:
Cash & Equivalents $11,385,641 $11,443,388
Accounts Receivables 4,655,527 3,547,968
Prepaid and Other Current Assets 320,068 393,275
Total Current Assets 16,361,236 15,384,631
Property and Equipment, Net 401,454 469,383
Other Assets
Deposits and Other Assets 14,866 14,866
Investments 471,584 471,584
Customer Relationships 1,149,750 1,182,600
Goodwill 20,883,886 20,883,886
Capitalized Software Costs, Net 182,942 182,942
Total Other Assets 22,703,028 22,735,878
Total Assets $ 39,465,718 $ 38,589,892
Liabilities
Current Liabilities
Accounts Payable $570,059 $580,309
Accrued Liabilities 1,284,588 1,502,203
Deferred Revenue 2,639,896 2,717,094
Lines of Credit 2,500,000 2,500,000
Current Portion of Notes Payable 218,118 239,199
Total Current Liabilities 7,212,661 7,538,805
Long-Term Liabilities
Notes Payable, Less Current Portion 445,753 491,253
Other Long-Term Liabilities 53,429 57,275
Total Long-Term Liabilities 499,182 548,528
Total Liabilities $ 7,711,843 $ 8,087,333
Shareholder Equity
Series B Preferred $6,254 $6,254
Series B-1 Preferred 2,082 1,802
Common Stock 193,101 192,296
Additional Paid-In Capital 74,095,202 73,272,620
Accumulated Deficit (42,542,764) (42,970,413)
Total Shareholder Equity $ 31,753,875 $ 30,502,559
Total Liabilities and Shareholder Equity $ 39,465,718 $ 38,589,892
Park City Group, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
3 Months Ended
FY ENDS June 9/30/16 9/30/15
Cash Flows From Operating Activities:
Net Income (Loss) $614,453 $(407,292)
Adjustments to Reconcile Net Income (Loss), in Operating Activities:
Depreciation and Amortization 116,579 129,098
Stock Compensation Expense 239,056 261,833
Bad Debt Expense 80,700 33,576
Decrease (Increase) in Trade Receivables (1,188,259) (192,273)
Decrease (Increase) in Prepaid Expenses and Other Assets 73,207 (3,726)
Increase (Decrease) in Accounts Payable (10,250) 178,505
Increase (Decrease) in Accrued Liabilities 30,003 (51,968)
Increase (Decrease) in Deferred Revenue (77,198) (99,057)
Net Cash From (Used In) Operating Activities $ (121,709) $ (151,304)
Cash Flows From Investing Activities:
Purchase of Property and Equipment (15,800) (18,586)
Purchase of Marketable Securities - (4,639,036)
Net Cash From (Used In) Investing Activities $ (15,800) $ (4,657,622)
Cash Flows From Financing Activities:
Proceeds from Employee Stock Plans 113,987 98,976
Proceeds from Exercise of Options and Warrants 35,000 -
Dividends Paid (2,644) (2,644)
Payments on Notes Payable and Capital Leases (66,581) (55,894)
Net Cash From (Used In) Financing Activities $ 79,762 $ 40,438
Net Increase (Decrease) in Cash $ (57,747) $ (4,768,488)
Cash at Beginning of Period 11,443,388 11,325,572
Cash at End of Period $ 11,385,641 $ 6,557,084

Investor Relations Contact: Jeff Elliott Three Part Advisors, LLC 972-423-7070 Dave Mossberg Three Part Advisors, LLC 817-310-0051

Source:Park City Group, Inc.