Park City Group Reports First Fiscal Quarter 2019 Results

Park City Group, Inc. (NASDAQ:PCYG), the parent company of ReposiTrak, Inc., which operates a B2B e-commerce, compliance, and supply chain platform that partners with retailers, wholesalers, and their suppliers, to accelerate sales, control risk, and improve supply chain efficiencies, announced financial results for the first fiscal quarter ended September 30, 2018.

First Fiscal Quarter Financial and Recent Business Highlights:

  • Revenue increased 26% to $5.9 million from $4.7 million in the same period last year
  • Net income nearly tripled to $966,000 from $331,000 in the same period last year
  • Record operating cash flows of $1.6 million drove total cash to record high of $16.5 million
  • Customer focus drove strong connection growth, low churn, and increased cross selling
  • Compliance connections reached 70,000 for nearly 300,000 connections across all applications

We began fiscal 2019 with strong momentum and continued growth across all areas of our business, said Randall K. Fields, Chairman and Chief Executive Officer of Park City Group. Total revenues increased 26% in the first quarter, and we delivered a near tripling of net income, and record operating cash flows. Results for the quarter were driven by our Compliance business, with growth of both Tier 1 and Tier 2 connections, continued growth in high quality Supply Chain subscription revenue, and a large year-over-year increase in revenues from our MarketPlace initiative.

Mr. Fields added. With the convergence of our Supply Chain offering into ReposiTrack and the launch of MarketPlace we have created a single platform to address our customers needs across every aspect of the supply chain. This is allowing us to better cross-sell our solutions within our network which positions us to more effectively drive growth and accelerate profitability. As a result, we are winning larger mandates from our retail and wholesale HUBs for both our Compliance and Supply Chain solutions and driving sales of our applications deeper into their supplier bases, most notably with our Tier 2 Supplier HUB growth initiative.

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With MarketPlace up and running, and revenues accelerating, we rotated our focus back to Compliance, Mr. Fields added. As a result, we generated strong results from Compliance activities during the first quarter. We saw near record growth in Tier-1 Compliance connections, while our Success Teams increased focus on signing up Tier-2 Supplier Hubs accelerated the pace of this activity from prior quarters. This gives us even greater confidence that this offering will be a catalyst for growth beginning in the second half of this year as we leverage our relationship with the thousands of suppliers in our Compliance network.

Our Supply Chain business continues to deliver solid revenue growth, said Mr. Fields. This is increasingly being driven by larger mandates from retail and wholesale HUBs seeking to drive our applications deeper into their supply chains as they see the benefit from our solutions to their competitive capabilities. However, overall results are also clearly underpinned by low churn of both Supply Chain and Compliance customers due to our relentless pursuit of customer satisfaction, with overall churn less than 2% of total revenues in the past year.

Last, but certainly not least, we continue to be encouraged by the results we are achieving from MarketPlace with one of the largest retailers in the country, concluded Mr. Fields. During the first quarter, we expanded our program with this customer to a second category, improved our execution capabilities, and are working to onboard new retail HUB buyers to the platform. As expected, we experienced some seasonality during the first quarter, which will likely continue into our second quarter. Nevertheless, year-over-year growth remains significant and we remain confident we will add at least two more buyer HUBs to MarketPlace in fiscal 2019.

Financial Results Summary:

First Fiscal Quarter Results: Total revenue increased 26% to $5.9 million for the three months ended September 30, 2018, as compared to $4.7 million during the same period a year ago. Total operating expenses were $4.9 million, a 15% increase from $4.3 million a year ago, as the Company begins to leverage investments made in increasing productivity. GAAP net income was $996,000, or 16.3% of revenue, versus $331,000, or 7.0% of revenue, a year ago, and GAAP net income to common shareholders was $820,000, or $0.04 per diluted share, compared to $214,000, or $0.01 per diluted share, a year ago.

Conference Call:

The Company will host a conference call at 4:30 P.M. ET today, November 8, 2018 to discuss the Companys results. Investors and interested parties may participate in the call by dialing 877-830-2597 or 785-424-1744 (international) and referring Conference ID: PARKCITY. The conference call is also being webcast and is available via the investor relations section of the Companys website, www.parkcitygroup.com.

A replay of the conference call will be available from 7:30 ET today until 11:59 p.m. ET on December 8, 2018. The Replay can be accessed by calling 844-512-2921 (toll-free) or 412-317-6671 (international). Please enter pin number 132193 to access the replay.

About Park City Group:

Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak, Inc., a compliance, supply chain, and e-commerce platform that partners with retailers, wholesalers, and their suppliers, to accelerate sales, control risk, and improve supply chain efficiencies. More information is available at www.parkcitygroup.com and www.repositrak.com.

Specific disclosure relating to Park City Group, including managements analysis of results from operations and financial condition, are contained in the Companys annual report on Form 10-K for the fiscal quarter ended September 30, 2018 and other reports filed with the Securities and Exchange Commission. Investors are encouraged to read and consider such disclosure and analysis contained in the Companys Form 10-K and other reports, including the risk factors contained in the Form 10-K.

— Financial Tables Follow —

         
Park City Group, Inc.
INCOME STATEMENT
 
3 Months Ended
FY ENDS June 9/30/18 9/30/17 % Chg.
 
Total Revenues $ 5,941,994 $ 4,712,165 26 %
 
Operating Expenses
Cost of Services and Product Support (1,728,526 ) (1,418,013 ) 22 %
Sales and Marketing (1,908,024 ) (1,585,940 ) 20 %
General and Administrative (1,143,311 ) (1,135,770 ) 1 %
Depreciation and Amortization   (145,375 )   (158,803 ) (8 %)
Total Operating Expenses (4,925,236 ) (4,298,526 ) 15 %
 
Operating Income $ 1,016,758 $ 413,639 146 %
 
Interest Income 35,124 17,798 97 %
Interest (Expense)   (10,473 )   (39,989 ) (74 %)
Income Before Taxes 1,041,409 391,448 166 %
 
Provision for Taxes   (75,000 )   (60,598 ) 24 %
 
Net Income $ 966,409 $ 330,850 192 %
 
Dividends on Preferred Stock   (146,611 )   (117,160 ) 25 %
 
Net Income to Common Shareholders $ 819,798   $ 213,690   284 %
 
GAAP EPS, Basic $ 0.04 $ 0.01 277 %
GAAP EPS, Diluted $ 0.04   $ 0.01   283 %
 
Weighted Average Shares, Basic 19,786,000 19,424,000
Weighted Average Shares, Diluted 20,363,000 20,338,000
 
         
Park City Group, Inc.
RECONCILIATION OF NON-GAAP ITEMS
 
3 Months Ended
FY ENDS June 9/30/18 9/30/17 % Chg.
 
Net Income $ 966,409 $ 330,850 192 %
 
Adjustments:
Depreciation and Amortization 145,375 158,803 (8 %)
Interest Expense (Income) (24,651 ) 22,191 NM
Provision for Taxes 75,000 60,598 24 %
Other (Incl. Bad Debt Exp.) 100,000 50,000 100 %
Stock Compensation Expense   95,688     198,314   (52 %)
 
Adjusted EBITDA $ 1,357,821 $ 820,756 65 %
 
 
Net Income $ 966,409 $ 330,850 192 %
 
Adjustments:
Stock Compensation Expense 95,688 198,314 (52 %)
Acquisition Related Amortization   32,850     32,850  
 
Adjusted non-GAAP Net Income 1,094,947 562,014 95 %
 
Preferred Dividends   (146,611 )   (117,160 ) 25 %
 
Adjusted non-GAAP Net Income
to Common Shareholders $ 948,336 $ 444,854 113 %
 
Adjusted Non-GAAP EPS $ 0.05 $ 0.02 113 %
 
Weighted Average Shares, Diluted 20,363,000 20,338,000
 
     
Park City Group, Inc.
CONSOLIDATED BALANCE SHEET
 
Period Ended
FY ENDS June 9/30/18 6/30/18
 
Assets
 
Current Assets:
Cash $ 16,451,196 $ 14,892,439
Receivables, Net Allowances 3,696,908 4,222,348
Contract Asset (Current Portion of Unbilled) 2,197,201 3,502,287
Prepaid Expenses and Other Current Assets   829,039     1,116,387  
Total Current Assets $ 23,174,344 $ 23,733,461
 
Property and Equipment, Net $ 1,809,830 $ 1,896,348
 
Other Assets:
Deposits, and Other Assets 18,691 18,691
Contract Asset (Long-Term Portion of Unbilled) 2,808,194 1,194,574
Investments 477,884 477,884
Customer Relationships 886,950 919,800
Goodwill 20,883,886 20,883,886
Capitalized Software Costs, Net   144,410     168,926  
Total Other Assets $ 25,220,015 $ 23,663,761
 
Total Assets $ 50,204,189   $ 49,293,570  
 
 
Liabilities
 
Current Liabilities:
Accounts Payable $ 939,520 $ 1,490,434
Accrued Liabilities 1,526,448 745,694
Contract Liability (Deferred Revenue) 2,115,539 2,335,286
Lines of Credit 4,660,000 3,230,000
Current Portion of Notes Payable   36,400     188,478  
Total Current Liabilities $ 9,277,907 $ 7,989,892
 
Long-Term Liabilities:
Notes Payable, Less Current Portion 267,612 1,592,077
Other Long-Term Liabilities       7,275  
Total Long-Term Liabilities $ 267,612 $ 1,599,352
 
Total Liabilities $ 9,545,519 $ 9,589,244
 
Shareholder Equity
 
Series B Preferred $ 6,254 $ 6,254
Series B-1 Preferred 2,124 2,124
Common Stock 197,927 197,738
Additional Paid-In Capital 76,846,244 76,711,887
Accumulated Deficit   (36,393,879 )   (37,213,677 )
 
Total Shareholder Equity $ 40,658,670 $ 39,704,326
 
Total Liabilities and Shareholder Equity $ 50,204,189   $ 49,293,570  
 
       
Park City Group, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
 
3 Months Ended
FY ENDS June 9/30/18 9/30/17
 
Cash Flows From Operating Activities:
Net Income $ 966,409 $ 330,850
 
Adj. to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation and Amortization 145,376 158,803
Bad Debt Expense 100,000 50,000
Stock Compensation Expense 95,688 198,314
Decrease (Increase) in Accounts Receivables 1,730,526 (711,674 )
Decrease (Increase) in LT Receivables, Prepaid Expenses and Other Assets (1,326,272 ) 459,814
Increase (Decrease) in Accounts Payable (550,914 ) 324,963
Increase (Decrease) in Accrued Liabilities 666,002 53,993
Increase (Decrease) in Deferred Revenue   (220,023 )   190,454  
Net Cash From (Used In) Operating Activities $ 1,606,792 $ 1,055,517
 
Cash Flows From Investing Activities:
Capitalization of Software Costs (111,241 )
Purchase of Property and Equipment   (1,492 )   (86,732 )
Net Cash From (Used In) Investing Activities $ (1,492 ) $ (197,973 )
 
Cash Flows From Financing Activities:
Proceeds from Issuance of Notes Payable 56,078
Net Increase in Line of Credit 1,430,000
Payments on Notes Payable and Capital Leases   (1,476,543 )   (81,842 )
Net Cash From (Used In) Financing Activities $ (46,543 ) $ (25,764 )
 
Net Increase (Decrease) in Cash $ 1,558,757 $ 831,780
 
Cash at Beginning of Period   14,892,439     14,054,006  
 
Cash at End of Period $ 16,451,196   $ 14,885,786  
 

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 Companys 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 Companys financial results with the Companys 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 Citys 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.

Investor Relations:
Park City Group, Inc.
Todd
Mitchell, CFO, 435-645-2216
[email protected]
or
Hayden
IR
Rob Fink / Brett Maas
646-415-8972 / 646-536-7331
[email protected]

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