Park City Group Reports Fiscal Third Quarter 2018 Results

Compliance Levels at All Time High, Total Connections Up Over 50% Year-Over-Year

MarketPlace Scales to More Than 700 Suppliers and 100,000 SKUs

Total Converged Platform Now Encompasses More Than 250,000 Connections

Growth Expected to Reaccelerate in Fiscal Fourth Quarter

SALT LAKE CITY--()--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, announced financial results for its fiscal 2018 third quarter ended March 31, 2018.

Strategic and Financial Highlights:

  • Revenue increased 11% to $5.3 million, growth to reaccelerate in fiscal fourth quarter. “Due to unexpectedly high interest in MarketPlace, we increased investment and focused resources on this initiative. Specifically, the Success Team engaged their customers in pre-revenue recruitment for MarketPlace which pushed other opportunities out of the quarter,” said Randall K. Fields. “As a result, MarketPlace revenue is expected to begin to scale in the fiscal fourth quarter, well ahead of plan. This will compound growth from pending deals for other services on our converged platform, giving us a high level of confidence that growth will reaccelerate to our targeted range in the fiscal fourth quarter.”
  • MarketPlace is successfully driving incremental revenue growth for ReposiTrak suppliers. “MarketPlace has been deployed by a major retailer, and we are now processing hundreds of orders per week for its suppliers,” said Mr. Fields. “This retailer is expanding the use of MarketPlace to new categories, providing an even stronger endorsement of our unique capabilities. By enhancing this retailer’s local control of product assortment, while driving more revenue to our suppliers, MarketPlace makes our converged platform very attractive to both parties, increasing demand for all of our services.”
  • Rapid scaling of MarketPlace to more than 700 suppliers attracts growing pipeline of HUBs. “We now have more than 700 suppliers in MarketPlace with nearly 100,000 SKUs available to buyers,” said Mr. Fields. “The addition of suppliers makes MarketPlace more attractive to buyers, and more buyers makes MarketPlace more attractive to suppliers, creating a virtuous circle. Based on our current pipeline, we expect to add several new HUBs to MarketPlace in the coming months. As a result, we are confident MarketPlace will make a substantial contribution to growth in fiscal 2019.
  • Enhanced focus on supplier HUB compliance to accelerate growth of this segment. “With total compliance connections increasing more than 50% year-over-year, we have cemented our dominance with retail and wholesale HUBs. We are now investing aggressively to tackle the supplier HUB segment by adding food safety applications and audit capabilities to help suppliers better manage these data-intensive processes with a single, easy-to-use solution. As a result, we are seeing a dramatic increase in the rate of supplier HUB sign ups. With literally tens of thousands of suppliers in our network, we expect this segment will join MarketPlace as a growth driver in fiscal 2019,” said Mr. Fields.
  • Interest in supply chain and multi-services deals on converged platform continues to rise. “Our converged platform now encompasses more than 250,000 connections across all services,” said Mr. Fields. “As a result, our network has reached the point where its scale is attracting more customers, and driving a trend toward larger supply chain and multi-service deals. We are currently in negotiations with several customers for large supply chain deals and other multi-service engagements to support continued growth. These take longer to close and must be artfully integrated into the Success Team’s workflow, adding variability to our quarterly results.”
  • First international partnership points to initial fruits of strategic initiative. “Our partnership with SerTech Exchange Ltd. will bring the power of the ReposiTrak platform and “speed retail” concept to the European market. SerTech’s strong relationships in the European retail food and food services markets offers us a pathway to explore the significant opportunities offered by the Global market for our solutions without losing our focus on execution for our domestic customers,” said Mr. Fields. “ReposiTrak has a strong record of creating value for U.S. retailers, and we will continue to explore opportunities to expand our presence in new geographical and vertical markets.”

Financial Results Summary:

Fiscal 3Q18 Quarterly Results: Total revenue increased 11% to $5.3 million for the three months ended March 31, 2018, as compared to $4.7 million during the same period a year ago. Total operating expenses were $4.8 million, a 27% increase from $3.8 million a year ago, primarily reflecting costs related to new product introductions, including MarketPlace and the expansion of ReposiTrak’s compliance capabilities to include new attributes. GAAP net income was $457,000, or 9% of revenue, versus $901,000 a year ago, and GAAP net income to common shareholders was $311,000, or $0.02 per diluted share, as compared to $699,000, or $0.03 per diluted share, a year ago.

Fiscal 2018 Year-to-Date Results: Total revenue increased 14% to $15.7 million for the nine months ended March 31, 2018, as compared to $13.8 million during the same period a year ago. Total operating expenses were $13.5 million, a 26% increase from $10.7 million a year ago, primarily reflecting costs related to new product introductions, including MarketPlace and the expansion of ReposiTrak’s compliance capabilities to include new attributes. GAAP net income was $2.1 million, or 14% of revenue, versus $2.9 million in the same period a year ago, and GAAP net income to common shareholders was $1.7 million, or $0.08 per diluted share, as compared to $2.3 million, or $0.11 per diluted share, in the same period a year ago.

Conference Call:

The Company will host a conference call at 4:15 P.M. Eastern today, May 10, 2018 to discuss the results. Investors and interested parties may participate in the call by dialing 800-263-0877 and referring to Conference ID: 3469837. 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, 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 management’s analysis of results from operations and financial condition, are contained in the Company’s annual report on Form 10-Q for the fiscal quarter ended March 31, 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 Company’s Form 10-Q and other reports, including the risk factors contained in the Form 10-K for the fiscal year ended June 30, 2017.

Park City Group, Inc.
INCOME STATEMENT

 

      3 Months Ended       9 Months Ended
FY ENDS June 3/31/18   3/31/17   % Chg. 3/31/18   3/31/17   % Chg.
 
Total Revenues $ 5,278,783 $ 4,748,652 11 % $ 15,715,654 $ 13,750,786 14 %
 
Operating Expenses
Cost of Services and Product Support (1,805,256 ) (1,342,772 ) 34 % (4,649,620 ) (3,736,691 ) 24 %
Sales and Marketing (1,574,663 ) (1,350,726 ) 17 % (4,781,752 ) (3,702,975 ) 29 %
General and Administrative (1,293,727 ) (1,006,605 ) 29 % (3,569,584 ) (2,967,842 ) 20 %
Depreciation and Amortization   (165,189 )   (106,899 ) 55 %   (487,815 )   (336,340 ) 45 %
Total Operating Expenses (4,838,835 ) (3,807,002 ) 27 % (13,488,771 ) (10,743,848 ) 26 %
 
Operating Income $ 439,948 $ 941,650 (53 %) $ 2,226,883 $ 3,006,938 (26 %)
 
Interest Income (Expense)   17,730     (4,729 ) (475 %)   (12,157 )   (18,052 ) (33 %)
 
Income Before Taxes 457,678 936,921 (51 %) 2,214,726 2,988,886 (26 %)
 
Provision for Taxes   (349 )   (35,471 ) NM   (76,063 )   (94,655 ) (20 %)
 
Net Income $ 457,329 $ 901,450 (49 %) $ 2,138,663 $ 2,894,231 (26 %)
 
Dividends on Preferred Stock   (146,611 )   (202,036 ) (27 %)   (426,737 )   (584,288 ) (27 %)
 
Net Income to Common Shareholders $ 310,718   $ 699,414   (56 %) $ 1,711,926   $ 2,309,943   (26 %)
 
GAAP EPS, Basic $ 0.02 $ 0.04 (56 %) $ 0.09 $ 0.12 (27 %)
GAAP EPS, Diluted $ 0.02   $ 0.03   (56 %) $ 0.08   $ 0.11   (26 %)
 
Weighted Average Shares, Basic 19,648,000 19,390,000 19,519,000 19,331,000
Weighted Average Shares, Diluted 20,321,000 20,353,000 20,250,000 20,251,000
 
 

Park City Group, Inc.
RECONCILIATION OF NON-GAAP ITEMS

                   

3 Months Ended

9 Months Ended
FY ENDS June 3/31/18 3/31/17 % Chg. 3/31/18 3/31/17 % Chg.
 
Net Income $ 457,329 $ 901,450 (49 %) $ 2,138,663 $ 2,894,231 (26 %)
 
Adjustments:
Depreciation and Amortization 165,189 106,899 55 % 487,817 336,340 45 %
Interest Expense (Income) (17,730 ) 4,729 NM 12,157 18,052 (33 %)
Provision for Taxes 349 35,471 (99 %) 76,063 94,655 (20 %)
Other (Incl. Bad Debt Exp.) 100,000 75,000 33 % 295,050 230,700 28 %
Stock Compensation Expense   101,649     383,509   (73 %)   489,748     961,589   (49 %)
 
Adjusted EBITDA $ 806,786 $ 1,507,058 (46 %) $ 3,499,498 $ 4,535,567 (23 %)
 
 
Net Income $ 457,329 $ 901,450 (49 %) $ 2,138,663 $ 2,894,231 (26 %)
 
Adjustments:
Stock Compensation Expense 101,649 383,509 (73 %) 489,748 961,589 (49 %)
Acquisition Related Amortization   32,850     32,850   -   98,550     98,550   -
 
Adjusted non-GAAP Net Income 591,828 1,317,809 (55 %) 2,726,961 3,954,370 (31 %)
 
Preferred Dividends   (146,611 )   (202,036 ) (27 %)   (426,737 )   (584,288 ) (27 %)
 
Adjusted non-GAAP Net Income
to Common Shareholders $ 445,217 $ 1,115,773 (60 %) $ 2,300,224 $ 3,370,082 (32 %)
 
Adjusted Non-GAAP EPS $ 0.02 $ 0.05 (60 %) $ 0.11 $ 0.17 (32 %)
 
Weighted Average Shares, Diluted 20,321,000 20,353,000 20,250,000 20,251,000
 

Park City Group, Inc.
CONSOLIDATED BALANCE SHEET

         
Period Ended
FY ENDS June 3/31/18 6/30/17
 
Assets
 
Current Assets:
Cash $ 14,828,160 $ 14,054,006
Accounts Receivables, Net Allowences 6,713,690 4,009,127
Prepaid Expenses and Other Current Assets   1,282,667     643,600  
Total Current Assets $ 22,824,517 $ 18,706,733
 
Property and Equipment, Net $ 1,985,021 $ 2,115,277
 
Other Assets:
Long-Term Receivables, Deposits, and Other 1,136,711 2,540,291
Investments 477,884 477,884
Customer Relationships 952,650 1,051,200
Goodwill 20,883,886 20,883,886
Capitalized Software Costs, Net   193,441     137,205  
Total Other Assets $ 23,644,572 $ 25,090,466
 
Total Assets $ 48,454,110   $ 45,912,476  
 
 
Liabilities
 
Current Liabilities:
Accounts Payable $ 1,253,560 $ 565,487
Accrued Liabilities 1,264,721 2,084,980
Deferred Revenue 2,360,394 2,350,846
Lines of Credit 3,230,000 2,850,000
Current Portion of Notes Payable   186,495     318,616  
Total Current Liabilities $ 8,295,170 $ 8,169,929
 
Long-Term Liabilities:
Notes Payable, Less Current Portion 1,641,064 1,996,953
Other Long-Term Liabilities   14,642     36,743  
Total Long-Term Liabilities $ 1,655,706 $ 2,033,696
 
Total Liabilities $ 9,950,876 $ 10,203,625
 
Shareholder Equity
 
Series B Preferred $ 6,254 $ 6,254
Series B-1 Preferred 2,124 2,859
Common Stock 197,657 194,241
Additional Paid-In Capital 76,634,385 75,489,189
Accumulated Deficit   (38,337,186 )   (39,983,692 )
 
Total Shareholder Equity $ 38,503,234 $ 35,708,851
 
Total Liabilities and Shareholder Equity $ 48,454,110   $ 45,912,476  
 
 

Park City Group, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS

         
9 Months Ended
FY ENDS June 3/31/18 3/31/17
 
Cash Flows From Operating Activities:
Net Income $ 2,138,663 $ 2,894,231
 
Adj. to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation and Amortization 487,815 336,340
Stock Compensation Expense 489,748 961,589
Bad Debt Expense 295,050 230,700
Decrease (Increase) in Accounts Receivables (2,999,613 ) (444,022 )
Decrease (Increase) in LT Receivables, Prepaid Expenses and Other Assets 764,513 (1,722,362 )
Increase (Decrease) in Accounts Payable 688,073 169,504
Increase (Decrease) in Accrued Liabilities (98,821 ) 92,281
Increase (Decrease) in Deferred Revenue   9,548     (558,576 )
Net Cash From (Used In) Operating Activities $ 1,774,976 $ 1,959,685
 
Cash Flows From Investing Activities:
Capitalization of Software Costs (111,241 ) -
Purchase of Property and Equipment (204,004 ) (337,777 )
Purchase of Long-Term Investments   -     (3,150 )
Net Cash From (Used In) Investing Activities $ (315,245 ) $ (340,927 )
 
Cash Flows From Financing Activities:
Proceeds from Exercise of Options and Warrants 666,903 121,625
Net Increase in Line of Credit 380,000 130,432
Proceeds from Employee Stock Plans 244,417 223,465
Proceeds from Issuance of Notes Payable 56,078 207,345
Dividends Paid (488,897 ) (7,932 )
Payments on Notes Payable and Capital Leases (544,088 ) (194,539 )
Preferred Stock Redemption   (999,990 )   -  
Net Cash From (Used In) Financing Activities $ (685,577 ) $ 480,396
 
Net Increase (Decrease) in Cash $ 774,154 $ 2,099,154
 
Cash at Beginning of Period   14,054,006     11,443,388  
 
Cash at End of Period $ 14,828,160   $ 13,542,542  
 
 

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.

Contacts

Investor Relations:
Park City Group, Inc.
Todd Mitchell, CFO, 435-645-2216
investor-relations@parkcitygroup.com

Release Summary

Compliance Levels at All Time High, Total Connections Up Over 50% Year-Over-Year; MarketPlace Scales to More Than 700 Suppliers and 100,000 SKUs

Contacts

Investor Relations:
Park City Group, Inc.
Todd Mitchell, CFO, 435-645-2216
investor-relations@parkcitygroup.com