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Park City Group Reports Fiscal Fourth Quarter and Full-Year 2017 Results

Fourth Quarter Revenue Growth Accelerates to Record 37%, Full-Year Growth to Record 35%
FY 2017 Net Income Increases to Record $3.8 million, or 20% of Revenue, from $667,000 in FY 2016
Management Expects FY 2018 Revenue Growth Within 3-5 Year Annual Target of 25% to 35%

SALT LAKE CITY, Sept. 13, 2017 (GLOBE NEWSWIRE) -- Park City Group, Inc. (NASDAQ:PCYG), a software company that uses big data management to help retailers and their suppliers increase sales and lower costs, while simultaneously reducing compliance risks, announced financial results for the fourth quarter and fiscal-year ended June 30, 2017.

Strategic and Financial Highlights:

  • Fiscal 4Q17 revenue growth accelerates to a record 37%, driving full-year revenue growth to 35%. “Our top-line growth and financial success is directly correlated to providing successful outcomes for our customers. Great execution builds trust, leads to deeper customer engagement and referrals, and expands both the scale and scope of our business,” said Randall K. Fields, Park City Group’s Chairman and CEO. “As a result, revenue increased a record 37% in fiscal 4Q17 to $5.2 million. Revenue for the full-year increased 35% to $18.9 million, at the high end of our 25% to 35% annual growth target.”

  • Fiscal 2017 net margin expands to 20%, driving record profit and cash flow performance. “Our focus on customer success drives a network effect that enables growth without the need for heavy investment in sales and marketing. As a result, we generated significant operating leverage with fiscal 4Q17 GAAP net income increasing 78% to $883,000, or 17.0% of revenue, and fiscal 2017 GAAP net income increasing 467% to $3.8 million, or 20.0% of revenue. Operating cash flow for the full-year increased to $2.3 million from $503,000 last year, lifting total cash to $14.1 million,” said Mr. Fields.

  • ReposiTrak supplier connections nearly double as momentum continues to accelerate. “During fiscal 2017, we increased the scale of our network by adding nearly as many ReposiTrak hubs and supplier connections as we did in the prior four years cumulatively,” said Mr. Fields. “Growth in total connections is being driven by the addition of large retail and wholesale hubs. However, we are also seeing a substantial acceleration in growth from smaller supplier hubs, which we expect to become an increasingly meaningful part of our business going forward, given the far greater number of prospects.”

  • Continuous expansion of ReposiTrak’s service offering reinforces industry leadership. “We have been busy increasing the scope of our network by introducing new applications that expand ReposiTrak’s capabilities. These include the ability of a hub to require deeper levels of compliance, down to individual items; new applications that help ensure product quality and safety; and tighter integration with the industry-standard food safety audit platforms. These new services enhance the value proposition to ReposiTrak’s hubs and their suppliers, reinforcing our industry leadership,” said Mr. Fields.

  • Successful introduction of converged business strategy solidifies multi-year growth outlook. “During the year, we successfully introduced Vendor Portal, our unified service delivery platform, and MarketPlace, our compliant-vendor sourcing solution, expanding ReposiTrak’s scope beyond that of a food safety and compliance platform, while helping to reinforce the scale of our network,” said Mr. Fields. “We are very encouraged by the favorable reaction from our customers and expect a more meaningful revenue contribution from both in fiscal 2018.”

  • Management continues to expect top-line growth of 25% to 35% and margin expansion. “We are benefiting from the positive network effect of our customers’ success. We look to add more ReposiTrak hubs and supplier connections in fiscal 2018 than in fiscal 2017. We are also exploring alliances both domestically and internationally to further increase the scale of our network. As a result, we are confident fiscal 2018 will be within our multi-year annual growth target of 25% to 35%, while operating leverage should drive higher margins and an even faster growing cash balance,” said Mr. Fields.

Financial Results Summary:

Fiscal 4Q17 Results: Total revenue increased 37% to $5.2 million for the three months ended June 30, 2017, as compared to $3.8 million during the same period a year ago. Total operating expenses were $4.3 million, a 30% increase from $3.3 million a year ago, reflecting planned investments. GAAP net income was $883,000, versus $498,000 a year ago, and GAAP net income to common shareholders was $677,000, or $0.03 per diluted share, as compared to $315,000, or $0.02 per diluted share, a year ago.

Fiscal 2017 Results: Total revenue increased 35% to $18.9 million for the twelve months of fiscal 2017, as compared to $14.0 million in fiscal 2016. Total operating expenses were $15.0 million, a 13% increase from $13.3 million in fiscal 2016. GAAP net income for fiscal 2017 was $3.8 million, versus $667,000 in fiscal 2016, and GAAP net income to common shareholders was $3.0 million, or $0.15 per diluted share, versus a loss of $63,000, or ($0.00) per share, in fiscal 2016.

Cash and Liquidity: The Company ended fiscal 2017 with $14.1 million in cash and cash equivalents, versus $11.4 million at the end of the fiscal 2016. During fiscal 2017, the Company generated $2.3 million in operating cash flow as compared to $503,000 in operating cash flow in fiscal 2016.

Conference Call:

The Company will host a conference call at 4:15 P.M. Eastern today, September 13, 2017 to discuss the results. Investors and interested parties may participate in the call by dialing 888-778-8913 and referring to Conference ID: 8591568. 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, helping retailers and suppliers to ‘Sell More, Stock Less, and See Everything’™. 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 Park City Group, including management’s analysis of results from operations and financial condition, are contained in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2017 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-K and other reports, including the risk factors contained in the Form 10-K.

Investor Relations Contact:

Jeff Elliott
Three Part Advisors, LLC
972-423-7070

Dave Mossberg
Three Part Advisors, LLC
817-310-0051

Non-GAAP Financial Measures

While this press release does not include non-GAAP financial measures, the financial presentation below contains certain financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission, including non-GAAP EBITDA and non-GAAP earnings per share. 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, 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, amortization of acquired intangible assets and other one-time cash and non-cash charges. 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 in the financial presentation below allows investors to compare the Company’s financial results with the Company’s historical financial results reported using non-GAAP financial measures, as well as with the financial results reported by others.

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 12 Months Ended
FY ENDS June 6/30/17
6/30/16
% Chg.
6/30/17
6/30/16
% Chg.
Total Revenues $ 5,188,477 $ 3,794,941 37 % $ 18,939,263 $ 14,010,693 35 %
Operating Expenses
Cost of Services and Product Support 1,581,351 1,056,176 50% 5,318,042 4,279,724 24%
Sales and Marketing 1,394,097 1,263,329 10% 5,097,072 5,371,005 (5%)
General and Administrative 1,169,154 847,761 38% 4,136,996 3,165,077 31%
Depreciation and Amortization 149,684 124,993 20% 486,024 507,446 (4%)
Total Operating Expenses 4,294,286 3,292,259 30% 15,038,134 13,323,252 13%
Income (Loss) from Operations $ 894,191 $ 502,682 78 % $ 3,901,129 $ 687,441 467 %
Other Income (Expenses)
Interest Income (Expense) (8,356) (5,138) 63% (26,408) 5,190 NM
Gain (Loss) on Disposal of Investment 10,380 - NM 10,380 (26,128) NM
Income (Loss) Before Taxes 896,215 497,544 80% 3,885,101 666,503 NM
(Provision) Benefit for Taxes (12,914) - NM (107,569) - NM
Net Income (Loss) $ 883,301 $ 497,544 78 % $ 3,777,532 $ 666,503 467 %
Dividends on Preferred Stock (206,523) (182,752) 13% (790,811) (729,288) 8%
Net Income (Loss) to Common Shareholders$676,778 $314,792 115% $2,986,721 $(62,785) NM
GAAP EPS, Basic $ 0.03 $ 0.02 113 % $ 0.15 $ (0.00) NM
GAAP EPS, Diluted $ 0.03 $ 0.02 112 % $ 0.15 $ (0.00) NM
Weighted Average Shares, Basic 19,419,000 19,219,000 19,353,000 19,151,000
Weighted Average Shares, Diluted 20,324,000 19,994,000 20,264,000 19,151,000
Park City Group, Inc.
RECONCILIATION OF NON-GAAP ITEMS
3 Months Ended 12 Months Ended
FY ENDS June 6/30/17 6/30/16 % Change
6/30/17 6/30/16 % Change
Net Income (Loss) $883,301 $497,544 78% $3,777,532 $666,503 NM
Adjustments:
Depreciation and Amortization 149,684 124,993 20% 486,024 507,446 (4%)
Interest Income (Expense) 8,356 5,138 63% 26,408 (5,190) NM
Other (Incl. Bad Debt Exp.) 104,620 51,128 105% 335,320 94,268 256%
Stock Compensation Expense 305,216 235,110 30% 1,266,805 1,010,312 25%
Adjusted EBITDA $ 1,451,177 $ 913,913 59 % $ 5,892,089 $ 2,273,339 159 %
Net Income (Loss) $883,301 $497,544 78% $3,777,532 $666,503 467%
Adjustments:
Stock Compensation Expense 305,216 235,110 30% 1,266,805 1,010,312 25%
Acquisition Related Amortization 32,850 32,850 - 131,400 131,400 -
Other (10,380) - NM (10,380) 26,128 NM
Adjusted non-GAAP Net Income (Loss) 1,210,987 765,504 58% 5,165,357 1,834,343 182%
Dividends on Preferred Stock (206,523) (182,752) 13% (790,811) (729,288) 8%
Adjusted non-GAAP Net Income (Loss)
to Common Shareholders $1,004,464 $582,752 72% $4,374,546 $1,105,055 296%
Adjusted Non-GAAP EPS $ 0.05 $ 0.03 70 % $ 0.22 $ 0.06 278 %
Weighted Average Shares, Diluted 20,324,000 19,994,000 20,264,000 19,332,000
Park City Group, Inc.
CONSOLIDATED BALANCE SHEET
Fiscal Year Ended
FY ENDS June 6/30/17 6/30/16
Assets
Current Assets:
Cash & Equivalents $14,054,006 $11,443,388
Accounts Receivables, Net Allowances 4,009,127 3,048,774
Prepaid Expenses and Other Current Assets 643,600 393,275
Total Current Assets $ 18,706,733 $ 14,885,437
Property and Equipment, Net $2,115,277 $469,383
Other Assets:
Long-Term Receivables, Deposits, and Other 2,540,291 514,060
Investments 477,884 471,584
Customer Relationships 1,051,200 1,182,600
Goodwill 20,883,886 20,883,886
Capitalized Software Costs, Net 137,205 182,942
Total Other Assets $25,090,466 $23,235,072
Total Assets $ 45,912,476 $ 38,589,892
Liabilities
Current Liabilities:
Accounts Payable $565,487 $580,309
Accrued Liabilities 2,084,980 1,502,203
Deferred Revenue 2,350,846 2,717,094
Lines of Credit 2,850,000 2,500,000
Current Portion of Notes Payable 318,616 239,199
Total Current Liabilities $ 8,169,929 $ 7,538,805
Long-Term Liabilities:
Notes Payable, Less Current Portion 1,996,953 491,253
Other Long-Term Liabilities 36,743 57,275
Total Long-Term Liabilities $2,033,696 $548,528
Total Liabilities $ 10,203,625 $ 8,087,333
Shareholder Equity
Series B Preferred $6,254 $6,254
Series B-1 Preferred 2,859 1,802
Common Stock 194,241 192,296
Additional Paid-In Capital 75,489,189 73,272,620
Accumulated Deficit (39,983,692) (42,970,413)
Total Shareholder Equity $ 35,708,851 $ 30,502,559
Total Liabilities and Shareholder Equity $ 45,912,476 $ 38,589,892
Park City Group, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
Fiscal Year Ended
FY ENDS June 6/30/17 6/30/16
Cash Flows From Operating Activities:
Net Income (Loss) $3,777,532 $666,503
Adjustments to Reconcile Net Income (Loss), in Operating Activities:
Depreciation and Amortization 486,024 507,446
Bad Debt Expense 345,700 68,140
Stock Compensation Expense 1,266,805 1,010,312
Loss on Short-Term Marketable Securities (10,380) 26,128
Decrease (Increase) in Trade Receivables (2,325,075) (1,975,517)
Decrease (Increase) in Prepaid Expenses and Other Assets (1,257,534) 70,152
Increase (Decrease) in Accounts Payable (14,822) (236,810)
Increase (Decrease) in Accrued Liabilities 355,136 (18,305)
Increase (Decrease) in Deferred Revenue (366,248) 385,174
Net Cash From (Used In) Operating Activities $ 2,257,138 $ 503,223
Cash Flows From Investing Activities:
Purchase of Marketable Securities - (4,639,036)
Cash from Sale of Marketable Securities - 4,612,908
Cash from Sale of Property and Equipment 13,000 -
Capitalization of Software Costs - (182,942)
Purchase of Property and Equipment (1,957,402) (80,987)
Purchase of Long-Term Investments (6,300) (75,584)
Net Cash From (Used In) Investing Activities $ (1,950,702) $ (365,641)
Cash Flows From Financing Activities:
Proceeds from Employee Stock Plans 223,465 199,848
Proceeds from Exercise of Options and Warrants 156,176 33,002
Proceeds from Issuance of Notes Payable 1,824,617 -
Net Increase in Line of Credit 350,000 -
Dividends Paid (10,576) (10,575)
Payments on Notes Payable and Capital Leases (239,500) (242,041)
Net Cash From (Used In) Financing Activities $ 2,304,182 $ (19,766)
Net Increase (Decrease) in Cash $ 2,610,618 $ 117,816
Cash at Beginning of Period 11,443,388 11,325,572
Cash at End of Period $ 14,054,006 $ 11,443,388

Source:Park City Group, Inc.