Park City Group Reports Record First Quarter Fiscal 2013 Results

Park City Group, Inc. logo

  • Record quarterly subscription revenue of $2.0 million, a 12% increase year over year
  • Total quarterly revenue of $2.7 million, a 5% increase year over year
  • Quarterly free cash flow of $222,000, versus ($76,000) during the same quarter last year
  • Record quarterly net income of $204,000, versus a net loss of ($280,000) during prior year
  • Quarterly non-GAAP EPS of $0.03, versus non-GAAP EPS of ($0.00) during the prior year
  • Net debt decreased 36% to $1.5, versus $2.4 million at the same time last year.
  • Provides outlook for record financial results during FY13.

PARK CITY, Utah, Nov. 8, 2012 (GLOBE NEWSWIRE) -- Park City Group (NYSE:PCYG), a Software-as-a-Service (SaaS) provider of unique supply chain solutions for retailers and their suppliers, today announced results for its fiscal first quarter ended September 30, 2012.

"Since we began the shift from a licensing to a subscription model, our quarterly subscription revenue has grown from less than $100,000, to a record of $2.0 million during the first quarter of fiscal 2013. Due to the recurring nature of subscription revenue and our high rates of renewal, we have a revenue engine that can deliver predictable and sustainable growth for the next several years. Combined with the 'asset light' nature of our business model that supports significant growth with limited incremental fixed costs, our bottom line growth will outpace the top line and we will continue to build on the record performance we delivered during the first quarter," said Randall K. Fields, Park City Group's Chairman and CEO.

A Subscription Revenue Growth chart is available here: http://media.globenewswire.com/cache/14562/file/16577.pdf

Subscription revenue during the first quarter increased 12% to $2.0 million, reflecting growth in sales to new and existing customers. Total revenue increased 5% to $2.7 million, as double digit growth in subscription revenue was partially offset by a 9% decrease in other revenue. "The growth of subscription revenue kept up with the accelerated pace of recent quarters, as we expanded the scope of our existing customer relationships, moved into new retail verticals outside of the grocery industry, and benefited from the adoption of our technology as the standard for tracking and tracing food and drugs safely throughout the global supply chain. In the coming quarters, we expect further acceleration as recent agreements with large retail hubs begin to contribute to revenue," said Mr. Fields.

Profitability

Total operating expenses during the quarter ended September 30, 2012 decreased 12% year over year to $2.5 million. The decrease in operating expenses was due to decreases in all expense categories, with the exception of depreciation and amortization costs, which remained relatively unchanged versus the prior year. Combined with incremental margin contribution from increased sales and lower interest costs, first quarter net income increased to a record $204,000 versus a net loss of ($280,000) during the same period last year. "We saw a $480,000 swing in profitability during the first quarter, which illustrates our continued focus on cost control and the operating leverage in our business model. While we expect the operating expense run rate to increase modestly during the course of the year, primarily due to additional sales headcount, we expect our bottom line growth to continue to outpace the top line as we continue to benefit from this leverage," said Mr. Fields.

Net loss available to common shareholders for the quarter ended September 30, 2012 was ($6,000), or break even on a per share basis, as compared to a net loss of ($488,000), or ($0.04) per share, during the prior year period. Non-GAAP earnings per share for the first quarter was $0.03 versus break even during the same period last year.

Cash

During the quarter ended September 30, 2012, free cash flow was $222,000, compared to ($76,000) during the same period last year. Total Cash at the end of the September 30, 2012 was $1.1 million, and net debt declined by 36% to $1.5 million, versus $2.4 million at the end of September 30, 2011. The Company expects to use its free cash flow to continue to reduce net debt to a level at, or below $1.0 million. Beyond that, excess free cash flow is expected to be used to repurchase shares under the Company's recently announced share repurchase plan.

"With our strong performance in the first quarter, we are on track to achieve record subscription revenue, record total revenue, and record net income for the fiscal year. Our food and drug safety partnership, ReposiTrak™, is already garnering significant interest and is helping us to access a much larger base of global food and drug retailers and suppliers. Not only does this greatly expand the size and rate of growth of our 'hub and spoke' network, it also provides significant opportunity to upsell these network connections to purchase additional supply chain management solutions. In addition, increasingly our focus is turning to larger customer opportunities. Both of these factors will provide meaningful revenue contribution in the quarters and years to come," Mr. Fields concluded.

The Company will host a conference call at 4:15 P.M. Eastern today, November 8, 2012, to discuss the results. Investors and interested parties may participate in the call by dialing (888) 429-4600 and referring to Conference ID: 41532568. 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 (NYSE: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 as well as providing food safety tracking information. The Company's service increases customers' sales and profitability while enabling lower inventory levels and ensuring regulatory compliance for both retailers and their suppliers.

Through a process known as Consumer Driven Sales Optimization™, Park City Group helps its customers turn information into cash and increased sales, using the largest scan based platform in the world. Scan based trading provides retail trading partners with a distinct competitive advantage through scan sales that provides store level visibility and sets the supply chain in motion. And since it is scan based, it can be used in a Direct Store Delivery (DSD) or warehouse setting.

ReposiTrak™ provides food retailers and suppliers with a robust solution that will help them protect their brands and remain in compliance with rapidly evolving regulations in the recently passed Food Safety Modernization Act. An internet-based technology, ReposiTrak™, will enable all participants in the farm-to-table supply chain to easily manage tracking and traceability requirements as products move between trading partners.

The Park City Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8655

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. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
Three Months Ended
September 30,
2012 2011
Revenues:
Subscription $ 1,954,595 $ 1,742,131
Other Revenue 758,232 837,149
Total revenues 2,712,827 2,579,280
Operating expenses:
Cost of services and product support 1,080,484 1,140,261
Sales and marketing 580,356 661,748
General and administrative 574,094 759,537
Depreciation and amortization 230,068 223,965
Total operating expenses 2,465,002 2,785,511
Income (loss) from operations 247,825 (206,231)
Other income (expense):
Interest expense (43,433) (73,490)
Income (loss) before income taxes 204,392 (279,721)
(Provision) benefit for income taxes: -- --
Net income (loss) 204,392 (279,721)
Dividends on preferred stock (209,980) (208,353)
Net income (loss) applicable to common shareholders $ (5,588) $ (488,074)
Weighted average shares, basic and diluted 12,215,000 11,650,000
Basic and diluted loss per share $ (0.00) $ (0.04)
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
September 30, June 30,
2012 2012
Assets (unaudited)
Current assets:
Cash $ 1,088,387 $ 1,106,176
Receivables, net of allowance of $140,624 and $220,000 at September 30, 2012 and June 30, 2012, respectively 2,269,257 2,290,859
Prepaid expenses and other current assets 190,012 171,526
Total current assets 3,547,656 3,568,561
Property and equipment, net 520,018 559,140
Other assets:
Deposits and other assets 35,466 20,697
Customer relationships 2,657,072 2,762,651
Goodwill 4,805,933 4,805,933
Capitalized software costs, net 182,707 219,248
Total other assets 7,681,178 7,808,529
Total assets $ 11,748,852 $ 11,936,230
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 464,336 $ 550,846
Accrued liabilities 1,049,100 1,242,328
Deferred revenue 1,919,864 2,081,459
Capital lease obligations 25,880 41,201
Lines of credit 1,200,000 1,200,000
Notes payable 807,575 798,704
Total current liabilities 5,466,755 5,914,538
Long-term liabilities:
Notes payable, less current portion 602,091 711,571
Total liabilities 6,068,846 6,626,109
Commitments and contingencies -- --
Stockholders' equity:
Series A Convertible Preferred Stock, $0.01 par value, 30,000,000 shares authorized; 685,582 and 685,671 shares issued and outstanding at September 30, 2012 and June 30, 2012, respectively 6,856 6,857
Series B Convertible Preferred Stock, $0.01 par value, 30,000,000 shares authorized; 411,927 shares issued and outstanding at September 30, 2012 and June 30, 2012, respectively 4,119 4,119
Common Stock, $0.01 par value, 50,000,000 shares authorized; 12,245,617 and 12,087,431 shares issued and outstanding at September 30, 2012 and June 30, 2012, respectively 122,456 120,874
Additional paid-in capital 38,137,088 37,763,196
Accumulated deficit (32,590,513) (32,584,925)
Total stockholders' equity 5,680,006 5,310,121
Total liabilities and stockholders' equity $ 11,748,852 $ 11,936,230
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
2012 2011
Cash Flows From Operating Activities:
Net income (loss) $ 204,392 $ (279,721)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 230,068 223,964
Bad debt expense -- 42,597
Stock compensation expense 235,222 252,767
(Increase) decrease in:
Receivables 21,602 460,282
Prepaids and other assets (33,255) 35,184
(Decrease) increase in:
Accounts payable (86,510) (302,994)
Accrued liabilities (139,379) (167,519)
Deferred revenue (161,595) (320,618)
Net cash provided by operating activities 270,545 (56,058)
Cash Flows From Investing Activities:
Purchase of property and equipment (48,826) (20,072)
Net cash used in investing activities (48,826) (20,072)
Cash Flows From Financing Activities:
Proceeds from issuance of notes 95,548 137,028
Proceeds from exercise of options and warrants -- 12,750
Dividends paid (123,578) --
Payments on notes payable and capital leases (211,478) (1,695,533)
Net cash used in financing activities (239,508) (1,545,755)
Net decrease in cash (17,789) (1,621,885)
Cash at beginning of period 1,106,176 2,618,229
Cash at end of period $ 1,088,387 $ 996,344
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes -- --
Cash paid for interest $ 43,873 $ 133,350
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Common stock to pay accrued liabilities $ 290,423 $ 133,154
Dividends accrued on preferred stock $ 209,980 $ 208,353
Dividends paid with preferred stock $ 85,050 $ 82,750
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted EBITDA
(In $000's)
Audited results of operations
Three Months Ended
September 30
2012 2011
Net Income (loss) $204 ($280)
Adjusted EBITDA Reconciliation Adjustments:
Depreciation and amortization 230 224
Bad debt expense -- 43
Interest, net 43 73
Stock based compensation 235 253
One-time expenses (stock and cash) -- 60
Adjusted EBITDA $712 $373
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Non-GAAP Net Income (Loss) to Common Shareholders and EPS
(In $000's, except per share)
Audited results of operations
Three Months Ended
September 30
2012 2011
Net Income (loss) $204 ($280)
Non-GAAP Net Income (Loss) Reconciliation Adjustments:
Stock based compensation 235 253
One-time expenses (stock and cash) -- 60
Acquisition related amortization 126 126
Non-GAAP Net Income $565 $159
Preferred dividends (210) (208)
Non-GAAP Net Income to Common Shareholders
$355 ($49)
Weighted average shares, diluted 12,215,000 11,650,000
Non-GAAP EPS, diluted $0.03 $0.00
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Non-GAAP Free Cash Flow
(In $000's)
Audited results of operations
Three Months Ended
September 30
2012 2011
Net Cash Provided by Operating Activities $271 ($56)
Non-GAAP Free Cash Flow Reconciliation Adjustments:
Purchase of property and equipment (49) (20)
Non-GAAP Free Cash Flow $222 ($76)

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.

Non-GAAP Net Debt
(In $000's)
Audited results of operations
Three Months Ended
September 30
2012 2011
Total Debt $2,610 $3,363
Less Total Cash $1,088 $996
Non-GAAP Net Debt $1,522 $2,367
CONTACT: Investor Relations Contact: Dave Mossberg Three Part Advisors, LLC 817-310-0051

Source:Park City Group, Inc.