USA Technologies Announces Third Quarter Fiscal 2015 Results
Third Quarter Financial Highlights:
- Total revenue of $15.4 million, a year-over-year increase of 47%
- License and transaction fee revenue of $11.1 million, a year-over-year increase of 23%
- Adjusted EBITDA of $2.4 million
-
GAAP net loss of $0.6 million, including the impact of
$1.1 million non-cash expense for the fair value warrant liability adjustment -
Non-GAAP net income of
$0.5 million , or$0.01 per share
Total revenue for the third quarter of fiscal 2015 was $15.4 million, a 47% increase from $10.4 million in the third quarter of fiscal 2014. License and transaction fees were $11.1 million compared with $9.0 million in the year ago quarter, a 23% increase. These fees, which are comprised of recurring monthly service fees as well as transaction processing fees, accounted for approximately 72% of total revenue. Equipment sales were $4.3 million compared to $1.4 million in last year's third quarter, a 200% increase.
"USA Technologies is in a position to take advantage of the cashless momentum in the self-service market, and the excitement surrounding mobile payments," said Stephen P. Herbert, USA Technologies' chairman and chief executive officer. "We are accelerating revenue growth and improving our cash flow, while simultaneously forming strategic relationships with companies such as Chase and MasterCard. Our QuickStart program drove the dramatic increase in equipment revenue, and helped bolster our cash position. We believe that the results for the quarter are a validation of the broad opportunity in self-service market and that we are poised for growth as we continue to capitalize through partnerships and drive customer connections."
GAAP operating income for the third quarter of fiscal 2015 was
approximately
GAAP net loss for the third quarter of fiscal 2015 was
approximately $0.6 million, compared with GAAP net income of $26.9
million, or
On a non-GAAP basis, net income was
Cash was $8.5 million as of
|
Three Months Ended |
||||
| 2015 | 2014 | %Change | ||
| Gross New Connections ('000s) | 24 | 22 | 9.1% | |
|
% from Existing Customer Base |
82% | 90% | -8.9% | |
| Net New Connections ('000s) | 14 | 20 | -30.0% | |
| Total Connections ('000s) | 302 | 244 | 23.8% | |
| New Customers Added | 475 | 575 | -17.4% | |
| Total Customers | 8,925 | 6,650 | 34.2% | |
| Total Number of Transactions (millions) | 54.8 | 42.8 | 28.0% | |
Fiscal 2015 Outlook
For full year fiscal 2015, management expects total revenue to be above $53.0 million, due to the positive impact of QuickStart on equipment revenue. License and transaction fee revenue is expected to be in the lower end of the range of $44.0 million to $47.0 million, for a growth rate of 24% to 31%. Net new connections are expected to be in the range of 66,000 to 76,000, for a growth rate of 27% to 46%.
Webcast and Conference Call
Management will host a conference call today,
A live webcast of the conference call will be available at http://investor.usatech.com/events.cfm.
Please access the website 15 minutes prior to the start of the call to
download and install any necessary audio software. A telephone replay of
the conference call will be available from
ABOUT
Forward-looking Statements:
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation the business strategy and the plans and objectives of USAT's management for future operations, are forward-looking statements. When used in this release, words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions, as they relate to USAT or its management, identify forward looking statements. Such forward-looking statements are based on the beliefs of USAT's management, as well as assumptions made by and information currently available to USAT's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, the ability of management to accurately predict or forecast future earnings or taxable income of USAT; the incurrence by us of any unanticipated or unusual non-operational expenses which would require us to divert our cash resources from achieving our business plan; the ability of USAT to retain key customers from whom a significant portion of its revenues is derived; the ability of USAT to compete with its competitors to obtain market share; whether USAT's customers continue to utilize USAT's transaction processing and related services, as our customer agreements are generally cancelable by the customer on thirty to sixty days' notice; the ability of USAT to obtain widespread commercial acceptance of it products; the ability of USAT to raise funds in the future through the sales of securities or debt financings in order to sustain its operations if an unexpected or unusual non-operational event would occur; the ability of USAT to use available data to predict future market conditions, consumer behavior and any level of cashless usage; the ability to prevent a security breach of our systems or services or third party services or systems utilized by us; the ability of USAT to efficiently and securely integrate cashless payment with new machine technologies; whether any patents issued to USAT will provide USAT with any competitive advantages or adequate protection for its products, or would be challenged, invalidated or circumvented by others; the ability of USAT to operate without infringing the proprietary rights of others; whether USAT would be able to sell sufficient ePort hardware to third party leasing companies as part of the QuickStart program in order to significantly reduce cash flows from operations; and whether USAT's existing or anticipated customers purchase, rent or utilize ePort devices or our other products or services in the future at levels currently anticipated by USAT. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date of this release. Unless required by law, USAT does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.
|
Consolidated Statement of Operations |
||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
|
|
|
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues: | ||||||||||||||||
| License and transaction fees | $ | 11,059,846 | $ | 8,999,689 | $ | 31,695,564 | $ | 26,177,818 | ||||||||
| Equipment sales | 4,297,894 | 1,444,243 | 8,735,715 | 4,959,686 | ||||||||||||
| Total revenues | 15,357,740 | 10,443,932 | 40,431,279 | 31,137,504 | ||||||||||||
| Cost of services | 7,157,333 | 5,785,721 | 21,566,280 | 16,690,569 | ||||||||||||
| Cost of equipment | 3,054,268 | 660,423 | 6,850,366 | 3,036,243 | ||||||||||||
| Gross profit | 5,146,139 | 3,997,788 | 12,014,633 | 11,410,692 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 4,279,888 | 3,479,300 | 11,442,439 | 9,968,212 | ||||||||||||
| Depreciation and amortization | 134,845 | 152,953 | 455,985 | 438,337 | ||||||||||||
| Total operating expenses | 4,414,733 | 3,632,253 | 11,898,424 | 10,406,549 | ||||||||||||
| Operating income | 731,406 | 365,535 | 116,209 | 1,004,143 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 26,394 | 3,102 | 40,491 | 21,342 | ||||||||||||
| Interest expense | (85,349 | ) | (60,934 | ) | (209,689 | ) | (182,315 | ) | ||||||||
| Change in fair value of warrant liabilities | (1,101,241 | ) | (168,897 | ) | (655,787 | ) | 12,304 | |||||||||
| Total other income (expense), net | (1,160,196 | ) | (226,729 | ) | (824,985 | ) | (148,669 | ) | ||||||||
| Income (loss) before provision for income taxes | (428,790 | ) | 138,806 | (708,776 | ) | 855,474 | ||||||||||
| Benefit (provision) for income taxes | (137,820 | ) | 26,727,720 | (179,705 | ) | 26,713,897 | ||||||||||
| Net income (loss) | (566,610 | ) | 26,866,526 | (888,481 | ) | 27,569,371 | ||||||||||
| Cumulative preferred dividends | (332,226 | ) | (332,226 | ) | (664,452 | ) | (664,452 | ) | ||||||||
| Net income (loss) applicable to common shares | $ | (898,836 | ) | $ | 26,534,300 | $ | (1,552,933 | ) | $ | 26,904,919 | ||||||
| Net earnings (loss) per common share (basic and diluted) | $ | (0.03 | ) | $ | 0.75 | $ | (0.04 | ) | $ | 0.78 | ||||||
| Weighted average number of common shares outstanding (basic and diluted) | 35,687,650 | 35,504,911 | 35,645,712 | 34,313,396 | ||||||||||||
|
Consolidated Balance Sheets |
||||||||
|
|
|
|||||||
| 2015 | 2014 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 8,474,706 | $ | 9,072,320 | ||||
|
Accounts receivable, less allowance for uncollectible accounts of
|
3,403,489 | 2,683,579 | ||||||
| Finance receivables | 749,631 | 119,793 | ||||||
| Inventory | 4,241,057 | 1,486,777 | ||||||
| Prepaid expenses and other current assets | 414,046 | 363,367 | ||||||
| Deferred income taxes | 907,691 | 907,691 | ||||||
| Total current assets | 18,190,620 | 14,633,527 | ||||||
| Finance receivables, less current portion | 3,505,248 | 352,794 | ||||||
| Prepaid expenses and other assets | 423,255 | 190,703 | ||||||
| Property and equipment, net | 13,574,402 | 21,138,580 | ||||||
| Deferred income taxes | 26,169,378 | 26,353,330 | ||||||
| Intangibles, net | 432,100 | 432,100 | ||||||
| Goodwill | 7,663,208 | 7,663,208 | ||||||
| Total assets | $ | 69,958,211 | $ | 70,764,242 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 5,208,646 | $ | 7,753,911 | ||||
| Accrued expenses | 1,994,746 | 1,915,799 | ||||||
| Line of credit | 4,000,000 | 5,000,000 | ||||||
| Current obligations under long-term debt | 416,695 | 172,911 | ||||||
| Income taxes payable | 16,774 | 21,021 | ||||||
| Deferred gain from sale-leaseback transactions | 860,390 | 380,895 | ||||||
| Total current liabilities | 12,497,251 | 15,244,537 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current portion | 1,708,484 | 249,865 | ||||||
| Accrued expenses, less current portion | 68,671 | 186,174 | ||||||
| Warrant liabilities | 1,240,996 | 585,209 | ||||||
| Deferred gain from sale-leaseback transactions, less current portion | 1,115,446 | 761,790 | ||||||
| Total long-term liabilities | 4,133,597 | 1,783,038 | ||||||
| Total liabilities | 16,630,848 | 17,027,575 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity: | ||||||||
| Preferred stock, no par value: | ||||||||
|
Authorized shares- 1,800,000 Series A convertible preferred-
Authorized shares- 900,000 Issued and outstanding shares- 442,968
(liquidation preference of |
3,138,056 | 3,138,056 | ||||||
|
Common stock, no par value: Authorized shares- 640,000,000 Issued and outstanding shares- 35,691,572 and 35,514,685, respectively |
224,689,374 | 224,210,197 | ||||||
| Accumulated deficit | (174,500,067 | ) | (173,611,586 | ) | ||||
| Total shareholders' equity | 53,327,363 | 53,736,667 | ||||||
| Total liabilities and shareholders' equity | $ | 69,958,211 | $ | 70,764,242 | ||||
|
Consolidated Statements of Cash Flows |
||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
|
|
|
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| OPERATING ACTIVITIES: | ||||||||||||||||
| Net income (loss) | $ | (566,610 | ) | $ | 26,866,526 | $ | (888,481 | ) | $ | 27,569,371 | ||||||
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||||||||||
|
Charges incurred in connection with the vesting and issuance of common stock for employee and director compensation |
216,469 | 60,024 | 541,164 | 248,880 | ||||||||||||
| (Gain) loss on disposal of property and equipment | (6,353 | ) | (2,431 | ) | (13,431 | ) | 7,053 | |||||||||
| Non-cash interest and amortization of debt discount | - | - | - | 2,095 | ||||||||||||
| Bad debt expense, net | 302,632 | (11,277 | ) | 602,344 | 66,773 | |||||||||||
| Depreciation | 1,433,251 | 1,413,521 | 4,350,373 | 3,910,110 | ||||||||||||
| Amortization | - | - | - | 21,953 | ||||||||||||
| Change in fair value of warrant liabilities | 1,101,241 | 168,897 | 655,787 | (12,304 | ) | |||||||||||
| Deferred income taxes, net | 121,046 | (26,727,720 | ) | 183,952 | (26,713,897 | ) | ||||||||||
| Recognition of deferred gain from sale leaseback transactions | (215,098 | ) | - | (618,522 | ) | - | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | (974,176 | ) | (470,164 | ) | (1,257,429 | ) | 579,562 | |||||||||
| Finance receivables | (2,248,618 | ) | 27,064 | (3,782,292 | ) | 92,469 | ||||||||||
| Inventory | 650,784 | 214,495 | (1,292,164 | ) | 338,415 | |||||||||||
| Prepaid expenses and other current assets | 150,159 | 52,483 | (207,305 | ) | (62,503 | ) | ||||||||||
| Accounts payable | (150,646 | ) | 386,832 | (2,610,090 | ) | (929,035 | ) | |||||||||
| Accrued expenses | 234,465 | 184,532 | (38,556 | ) | (300,984 | ) | ||||||||||
| Income taxes payable | 16,774 | - | (4,247 | ) | - | |||||||||||
| Net cash provided by (used in) operating activities | 65,320 | 2,162,782 | (4,378,897 | ) | 4,817,958 | |||||||||||
| INVESTING ACTIVITIES: | ||||||||||||||||
| Purchase of property and equipment | (3,860 | ) | (35,134 | ) | (54,229 | ) | (60,361 | ) | ||||||||
| Purchase of property for rental program | - | (2,643,439 | ) | (1,641,993 | ) | (7,211,661 | ) | |||||||||
| Proceeds from sale of rental equipment under sale leaseback transactions | - | - | 4,993,879 | - | ||||||||||||
| Proceeds from the sale of property and equipment | 19,327 | 5,513 | 54,238 | 30,375 | ||||||||||||
| Net cash provided by (used in) investing activities | 15,467 | (2,673,060 | ) | 3,351,895 | (7,241,647 | ) | ||||||||||
| FINANCING ACTIVITIES: | ||||||||||||||||
|
Net proceeds from the exercise of common stock warrants and the retirement of common stock |
- | 521,762 | (61,987 | ) | 2,286,849 | |||||||||||
| Proceeds (repayment) from line of credit, net | - | - | (1,000,000 | ) | 1,000,000 | |||||||||||
| Proceeds from long-term debt | 1,752,717 | - | 1,752,717 | - | ||||||||||||
| Repayment of long-term debt | (92,875 | ) | (89,366 | ) | (261,342 | ) | (267,043 | ) | ||||||||
| Net cash provided by financing activities | 1,659,842 | 432,396 | 429,388 | 3,019,806 | ||||||||||||
| Net increase (decrease) in cash and cash equivalents | 1,740,629 | (77,882 | ) | (597,614 | ) | 596,117 | ||||||||||
| Cash and cash equivalents at beginning of period | 6,734,077 | 6,654,999 | 9,072,320 | 5,981,000 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 8,474,706 | $ | 6,577,117 | $ | 8,474,706 | $ | 6,577,117 | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||||||
| Cash paid for interest | $ | 67,102 | $ | 59,399 | $ | 202,293 | $ | 189,203 | ||||||||
| Depreciation expense allocated to cost of sales | $ | 1,271,207 | $ | 1,260,568 | $ | 3,867,189 | $ | 3,493,726 | ||||||||
| Reclass of rental program property to inventory, net | $ | 1,374,447 | $ | 13,686 | $ | 1,393,096 | $ | 26,803 | ||||||||
| Prepaid items financed with debt | $ | - | $ | 144,312 | $ | 103,125 | $ | 246,162 | ||||||||
| Equipment and software acquired under capital lease | $ | - | $ | 195,725 | $ | 107,903 | $ | 217,761 | ||||||||
| Disposal of property and equipment | $ | 342,963 | $ | 15,141 | $ | 394,866 | $ | 233,857 | ||||||||
| Disposal of property and equipment under sale leaseback transactions | $ | - | $ | - | $ | 3,873,275 | $ | - | ||||||||
Discussion of Non-GAAP Financial Measures:
This press release contains certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Reconciliations between non-GAAP and GAAP measures are set forth below.
The following non-GAAP financial measures are discussed herein: adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share - basic and diluted. The presentation of these additional financial measures are not intended to be considered in isolation from, or superior to, or as a substitute for the financial measures prepared and presented in accordance with GAAP (Generally Accepted Accounting Principles), including the net income or net loss of USAT or net cash used in operating activities. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with USAT's net income or net loss as determined in accordance with GAAP. These non-GAAP financial measures are not required by or defined under GAAP and may be materially different from the non-GAAP financial measures used by other companies. USAT has provided below the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
As used herein, non-GAAP net income represents GAAP net income (loss) excluding costs or benefits relating to any adjustment for fair value of warrant liabilities and changes in the Company's valuation allowances for taxes.
Non-GAAP net earnings (loss) per common share - diluted is calculated by dividing non-GAAP net income (loss) applicable to common shares by the number of diluted weighted average shares outstanding.
Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and change in fair value of warrant liabilities and stock-based compensation expense. We have excluded the non-operating items, benefit from reduction of the deferred tax asset valuation allowances and change in fair value of warrant liabilities, because they represent a non-cash charge that is not related to USAT's operations. We have excluded the non-cash expense stock-based compensation as it does not reflect the cash-based operations of USAT. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance and liquidity, and because it is less susceptible to variances in actual performance resulting from depreciation and amortization and non-cash charges for changes in fair value of warrant liabilities and stock-based compensation expense.
Management believes that non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share - diluted are important measures of USAT's business. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance. We believe that these non-GAAP financial measures serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods, and when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors' overall understanding of our current and future financial performance.
| Non GAAP Reconciliation | ||||||||
| Reconciliation of Net Income (loss) to Non-GAAP Net Income and Earnings (loss) Per Common Share to Non-GAAP Earnings (loss) Per Common Share | ||||||||
|
Three months ended
|
||||||||
| 2015 | 2014 | |||||||
| Net income (loss) | $ | (566,610 | ) | $ | 26,866,526 | |||
| Non-GAAP adjustments: | ||||||||
| Fair value of warrant adjustment | 1,101,241 | 168,897 | ||||||
| Benefit from reduction of valuation allowances | - | (26,713,897 | ) | |||||
| Non-GAAP net income | $ | 534,631 | $ | 321,526 | ||||
| Net income (loss) | $ | (566,610 | ) | $ | 26,866,526 | |||
| Non-GAAP net income | $ | 534,631 | $ | 321,526 | ||||
| Cumulative preferred dividends | (332,226 | ) | (332,226 | ) | ||||
| Net income (loss) applicable to common shares | $ | (898,836 | ) | $ | 26,534,300 | |||
| Non-GAAP net income (loss) applicable to common shares | $ | 202,405 | $ | (10,700 | ) | |||
| Net earnings (loss) per common share - basic and diluted | $ | (0.03 | ) | $ | 0.75 | |||
| Non-GAAP net earnings (loss) per common share - basic and diluted | $ | 0.01 | $ | - | ||||
| Weighted average number of common shares outstanding - basic | 35,687,650 | 35,504,911 | ||||||
|
Reconciliation of GAAP Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) |
||||||||
|
Three months ended
|
||||||||
| 2015 | 2014 | |||||||
| Net income (loss) | $ | (566,610 | ) | $ | 26,866,526 | |||
| Less interest income | (26,394 | ) | (3,102 | ) | ||||
| Plus interest expense | 85,349 | 60,934 | ||||||
| Plus income tax expense | 137,820 | (26,727,720 | ) | |||||
| Plus depreciation expense | 1,433,251 | 1,413,521 | ||||||
| Plus change in fair value of warrant liabilities | 1,101,241 | 168,897 | ||||||
| Plus stock-based compensation | 216,469 | 60,024 | ||||||
| Adjusted EBITDA | $ | 2,381,126 | $ | 1,839,080 | ||||
F-USAT
Investor Contact:
mike@blueshirtgroup.com
Source:
News Provided by Acquire Media