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Park City Group Reports Financial Results for the Fiscal Fourth Quarter and Full-Year 2019

SALT LAKE CITY--(BUSINESS WIRE)--

Full-year Cash from Operations More than Doubled to $4.6 Million; 15% EPS Growth and Record Cash Balance; Accelerating Network Growth Provides Foundation for Revenue Growth

Park City Group, Inc. (PCYG), the parent company of ReposiTrak, Inc., which operates a B2B ecommerce, 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 fourth fiscal quarter and fiscal year ended June 30, 2019.

Financial Highlights:

  • Full-year cash from operations more than doubled to $4.6 million. Total cash of $19 million
  • Compliance network reached 89,000, up 42%
  • Total Tier 2 connections increased 25%
  • Total revenue decreased 4% due to lower non-recurring license, professional service and MarketPlace revenue
  • Recurring revenue increased from 64% to 70% of total revenue
  • Operating expense decreased 7%
  • Net income increased 14%
  • Repurchased 87,600 shares at an average price of $5.47 under share repurchase program for a total of nearly $500,000

“This was a year of continued progress as each of the three revenue streams drove a 13% increase in the size of our network as we reduced our cost structure,” said Randall K. Fields, Chairman and CEO of Park City Group. “We are focused on continuing to grow recurring revenue and reducing non-recurring license revenue. We are on increasing Tier 2 connections and farming our existing base of over 23,000 customers. Driving the network scale, making it easier for customers to buy, provides cross selling opportunities for more services, at a competitive price. In addition, the broader scale of suppliers in our network empowers MarketPlace.”

“Our cost structure continues to be well controlled,” added Mr. Fields. “This enables us to grow our earnings power and increase our cash flow from operations. We ended the year with the strongest balance sheet in our company’s history.”

Mr. Fields concluded, “Our focus for fiscal 2020 is to continue to grow the percentage of our revenue that is recurring, helping to mitigate the impact of the lumpy contribution from MarketPlace. The 5% year-over-year increase in recurring revenues in the fourth quarter demonstrates our initial ability to achieve this goal, and we expect to report continued increases in our recurring revenue going forward as we grow our network scale. Strategically we remain focused on leveraging our modest fixed cost structure, maximizing profitability and strengthening our balance sheet, which will enable us to repurchase shares and generate value for our customers and shareholders.”

Fourth Quarter and Full Year Financial Results:

Fourth Fiscal Quarter 2019 Results (three months ended June 30, 2019 vs. three months ended June 30, 2018):

Total revenue declined 26% to $4.7 million as compared to $6.3 million primarily due to lower non-recurring revenues from licenses, associated professional services and MarketPlace. Total operating expense was $4.4 million, a 13% decrease from $5.0 million, as the Company is leveraging investments made in increasing productivity. GAAP net income was $182,000, or 4% of revenue, versus $1.3 million, or 20% of revenue, and GAAP net income to common shareholders was $36,000, or $0.00 per diluted share, compared to $1.1 million, or $0.06 per diluted share.

Full-Year Fiscal 2019 Results (12 months ended June 30, 2019 vs. 12 months ended June 30, 2018):

Total revenue decreased 4% to $21.2 million, as compared to $22.0 million. Total operating expenses were $17.2 million, a 7% decrease from $18.5 million. GAAP net income was $3.9 million, or 18% of revenue, versus $3.4 million, or 16% of revenue, and GAAP net income to common shareholders was $3.3 million, or $0.16 per diluted share, compared to $2.8 million, or $0.14 per diluted share.

Strategic Outlook:

Over the last 12 months, Park City Group has introduced MarketPlace, validated its value to customers, and built the infrastructure and systems to support it. MarketPlace, as expected, will contribute to the volatility of quarter-to-quarter revenues and will increase non-recurring transactional revenue. To offset this impact, and help improve predictability in quarterly revenue, management is focused on growing its recurring revenue base from Supply Chain and Compliance revenue streams, transforming the Company into more of a SaaS provider. In the short term, this may negatively impact revenues, but over time we believe it will create sustainable growth, as well as improved gross and operating margins.

“As we expand our network, adding additional Tier-2 hubs and the suppliers that work with these customers, we expect fiscal 2020 to again be a year of top line growth,” added Mr. Fields. “Growing our participation with our existing customers continues to represent a significant revenue opportunity, and we are focused on harvesting this opportunity while maximizing our profitability.”

In addition, we believe the Company is now positioned to convert a larger percentage of operating income into net income and a greater percentage of net income into free cash flow. Accordingly, management continues to expect to grow the bottom line faster than the top line.

Conference Call:

The Company will host a conference call at 4:15 p.m. ET today, September 12, 2019 to discuss the Company's results. Investors and interested parties may participate in the call by dialing 877-407-9716 or 201-493-6779 (international) and referring Conference ID: PARKCITY. The conference call is also being webcast and is available via the investor relations section of the Company's website, www.parkcitygroup.com. A replay of the conference call will be available from 7:15 ET today until 11:59 p.m. ET on October 12, 2019. The Replay can be accessed by calling 844-512-2921 (toll-free) or 412-317-6671 (international). Please enter pin number 13693919 to access the replay.

About Park City Group:

Park City Group, Inc. (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 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, 2019 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.

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 Balance Sheets

Assets

 

June 30,

2019

 

 

June 30,

2018

 

Current Assets

 

 

 

 

 

 

Cash

 

$

18,609,423

 

 

$

14,892,439

 

Receivables, net allowance for doubtful accounts of $145,825 and $153,220 at June 30, 2019 and
2018, respectively

 

 

3,878,658

 

 

 

4,222,348

 

Contract asset – unbilled current portion

 

 

3,023,694

 

 

 

3,502,287

 

Prepaid expense and other current assets

 

 

1,037,099

 

 

 

1,116,387

 

 

 

 

 

 

 

 

 

 

Total Current Assets

 

 

26,548,874

 

 

 

23,733,461

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

2,972,257

 

 

 

1,896,348

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

Deposits, and other assets

 

 

17,146

 

 

 

18,691

 

Contract asset – unbilled long-term portion

 

 

1,659,110

 

 

 

1,194,574

 

Investments

 

 

-

 

 

 

477,884

 

Customer relationships

 

 

788,400

 

 

 

919,800

 

Goodwill

 

 

20,883,886

 

 

 

20,883,886

 

Capitalized software costs, net

 

 

70,864

 

 

 

168,926

 

 

 

 

 

 

 

 

 

 

Total Other Assets

 

 

23,419,406

 

 

 

23,663,761

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

52,940,537

 

 

$

49,293,570

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

530,294

 

 

$

1,490,434

 

Accrued liabilities

 

 

1,399,368

 

 

 

745,694

 

Contract liability - deferred revenue

 

 

1,917,787

 

 

 

2,335,286

 

Lines of credit

 

 

4,660,000

 

 

 

3,230,000

 

Current portion of notes payable

 

 

295,168

 

 

 

188,478

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

8,802,617

 

 

 

7,989,892

 

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

Notes payable, less current portion

 

 

920,754

 

 

 

1,592,077

 

Other long-term liabilities

 

 

-

 

 

 

7,275

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

9,723,371

 

 

 

9,589,244

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock; $0.01 par value, 30,000,000 shares authorized;

 

 

 

 

 

 

 

 

Series B Preferred, 700,000 shares authorized; 625,375 shares issued and outstanding at
June 30, 2019 and 2018;

 

 

6,254

 

 

 

6,254

 

Series B-1 Preferred, 550,000 shares authorized; 212,402 shares issued and outstanding at
June 30, 2019 and 2018, respectively

 

 

2,124

 

 

 

2,124

 

Common stock, $0.01 par value, 50,000,000 shares authorized; 19,793,372 and 19,773,549 issued
and outstanding at June 30, 2019 and 2018, respectively

 

 

197,936

 

 

 

197,738

 

Additional paid-in capital

 

 

76,908,566

 

 

 

76,711,887

 

Accumulated deficit

 

 

(33,897,714

)

 

 

(37,213,677

)

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

43,217,166

 

 

 

39,704,326

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

52,940,537

 

 

$

49,293,570

 

Park City Group, Inc.                          
INCOME STATEMENT                            
                                 
          Three Months Ended   Year Ended
FY ENDS June     6/30/19   6/30/18  

% Chg.

  6/30/19   6/30/18   % Chg.
                                 
Total Revenues    

 $

  4,656,245

 

 

 $

  6,320,623

 

 

(26

%)

 

 $

21,169,608

 

 

 $

22,036,278

 

 

(4

%)

                                 
Operating Expenses                            
  Cost of Services and Product Support

 

    (1,488,848

)

 

 

    (1,937,866

)

 

(23

%)

 

 

    (5,830,084

)

 

 

    (6,587,486

)

 

(11

%)

  Sales and Marketing    

 

    (1,472,933

)

 

 

    (1,621,591

)

 

(9

%)

 

 

    (6,006,597

)

 

 

    (6,403,343

)

 

(6

%)

  General and Administrative    

 

    (1,251,507

)

 

 

    (1,325,162

)

 

(6

%)

 

 

    (4,742,205

)

 

 

    (4,894,746

)

 

(3

%)

  Depreciation and Amortization    

 

       (171,716

)

 

 

       (146,039

)

 

18

%

 

 

       (601,433

)

 

 

       (633,854

)

 

(5

%)

  Total Operating Expenses    

 

    (4,385,004

)

 

 

    (5,030,658

)

 

(13

%)

 

 

  (17,180,319

)

 

 

  (18,519,429

)

 

(7

%)

                                 
Operating Income    

 $

     271,241

 

 

 $

  1,289,965

 

 

(79

%)

 

 $

  3,989,289

 

 

 $

  3,516,849

 

 

13

%

                                 
  Interest Income    

 

          81,492

 

 

 

            9,486

 

 

759

%

 

 

        247,059

 

 

 

        164,217

 

 

50

%

  Interest (Expense)    

 

        (21,882

)

 

 

                 -  

 

 

 NM 

 

 

 

        (42,684

)

 

 

       (166,888

)

 

(74

%)

  Gain (loss) Investment    

 

       (148,548

)

 

 

                 -  

 

       

 

       (148,548

)

     

 NM 

 

  Income Before Taxes    

 

        182,303

 

 

 

     1,299,451

 

 

(86

%)

 

 

     4,045,116

 

 

 

     3,514,178

 

 

15

%

                                 
  Provision for Taxes    

 

                 -  

 

 

 

        (29,332

)

 

 NM 

 

 

 

       (142,710

)

 

 

       (105,395

)

 

35

%

                                 
Net Income    

 $

     182,303

 

 

 $

  1,270,119

 

 

(86

%)

 

 $

  3,902,406

 

 

 $

  3,408,783

 

 

14

%

                                 
  Dividends on Preferred Stock    

 

       (146,611

)

 

 

       (146,611

)

 

                   -

 

 

 

       (586,443

)

 

 

       (573,348

)

 

2

%

                                 
Net Income to Common Shareholders  

 $

       35,692

 

 

 $

  1,123,508

 

 

(97

%)

 

 $

  3,315,963

 

 

 $

  2,835,435

 

 

17

%

                                 
GAAP EPS, Basic    

 $

           0.00

 

 

 $

           0.06

 

 

(97

%)

 

 $

           0.17

 

 

 $

           0.14

 

 

15

%

GAAP EPS, Diluted    

 $

           0.00

 

 

 $

           0.06

 

 

(97

%)

 

 $

           0.16

 

 

 $

           0.14

 

 

16

%

                                 
Weighted Average Shares, Basic    

 

19,871,000

 

 

 

19,789,000

 

       

 

19,849,000

 

 

 

19,581,000

 

   
Weighted Average Shares, Diluted    

 

20,303,000

 

 

 

20,346,000

 

       

 

20,368,000

 

 

 

20,280,000

 

   

 

 

PARK CITY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

 

 

For the Years Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

 

3,902,406

 

 

$

 

3,408,783

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

601,433

 

 

 

633,854

 

Stock compensation expense

 

 

551,881

 

 

 

588,984

 

Bad debt expense

 

 

510,000

 

 

 

465,050

 

Decrease (increase) in:

 

 

 

 

 

 

 

 

Trade receivables

 

 

312,283

 

 

 

(4,180,558

)

Long-term receivables, prepaids and other assets

 

 

(383,703

)

 

 

854,239

Increase (decrease) in:

 

 

 

 

 

 

 

 

Accounts payable

 

 

(960,140

)

 

 

924,947

 

Accrued liabilities

 

 

462,194

 

 

 

(500,253

)

Deferred revenue

 

 

(417,499

)

 

 

(15,560

)

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

4,578,855

 

 

 

2,179,486

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,447,880

)

 

 

(204,005

)

Capitalization of software costs

 

 

-

 

 

 

(111,241

)

Sale of long-term investments

 

 

477,884

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(969,996

)

 

 

(315,246

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from employee stock purchase plans

 

 

-

 

 

 

244,417

 

Proceeds from exercises of options and warrants

 

 

164,997

 

 

 

666,903

 

Proceeds from issuance of note payable

 

1,268,959

 

 

56,078

 

Net increase in lines of credit

 

 

1,430,000

 

 

 

380,000

 

Redemption of Series B-1 Preferred

 

 

-

 

 

 

(999,990

)

Dividends paid

 

 

(439,833

)

 

 

(782,123

)

Common stock buy-back

 

 

(482,406

)

 

 

-

 

Payments on notes payable and capital leases

 

 

(1,833,592

)

 

 

(591,092

)

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

 

108,125

 

 

 

(1,025,807

)

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

3,716,984

 

 

 

838,433

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

14,892,439

 

 

 

14,054,006

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

 

18,609,423

 

 

$

 

14,892,439

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

 

76,063

 

 

$

 

75,714

 

Cash paid for interest

 

$

 

146,889

 

 

$

 

166,888

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Non-Cash Investing and Financing Activities

 

 

 

 

 

 

 

 

Preferred Stock to pay accrued liabilities

 

$

 

-

 

 

$

 

200,000

 

Common Stock to pay accrued liabilities

 

$

 

514,286

 

 

$

 

1,048,710

 

Dividends accrued on Preferred Stock

 

$

 

586,443

 

 

$

 

573,532

 

 

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