PAR Technology Corporation Announces 2019 Second Quarter Results

764 New Brink Activations in the Quarter, SaaS Revenues Increase 40% year-over-year

NEW HARTFORD, N.Y.--()--PAR Technology Corporation (NYSE: PAR) today announced its results for its second quarter ended June 30, 2019.

Summary of Fiscal 2019 Second Quarter and Year-to-Date Financial Results

  • Revenues were reported at $44.2 million for the second quarter of 2019, compared to $52.6 million for the same period in 2018, a 16% decrease.
  • GAAP net loss for the second quarter of 2019 was $1.1 million, or $0.07 loss per share, a decrease from the GAAP net loss of $1.3 million, or $0.08 loss per share reported for the same period in 2018.
  • Non-GAAP net loss for the second quarter of 2019 was $3.0 million, or $0.18 loss per share, compared to non-GAAP net loss of $652,000, or $0.04 loss per share, for the same period in 2018.
  • Revenues were reported at $88.9 million for the first six months of 2019, compared to $108.2 million for the same period in 2018, an 18% decrease.
  • GAAP net loss for the first six months of 2018 was $3.8 million, or $0.24 loss per share, a decrease from the GAAP net loss of $1.3 million, or $0.08 loss per share reported for the same period in 2018.
  • Non-GAAP net loss for the first six months of 2019 was $4.8 million, or $0.30 loss per share, compared to non-GAAP net loss of $37,000 or $0.00 loss per share, for the same period in 2018.

A reconciliation and description of non-GAAP financial measures to corresponding GAAP financial measures are included in the tables at the end of this press release.

“We continue to focus on expanding our customer portfolio with enterprise restaurant organizations that range in size all the way into the thousands of sites. These are innovative restaurant companies looking to increase their in-store effectiveness and efficiencies through the use of technology; specifically, cloud software. This is the sweet spot for our Brink POS solution and brings unparalleled value and features that resonate well within this market. Our second quarter performance included 764 new customer deployments on Brink POS and a 40% increase in SaaS revenues from last year’s second quarter,” commented PAR Technology’s CEO & President, Savneet Singh. “We have begun creating revenue streams within our Brink partner ecosystem that include a large number of companies that benefit from a technology relationship with PAR. We view these partnerships as accretive to our internal sales efforts. The financial impact of these relationships is still in its infancy and we are increasing our efforts to expand these partnerships when beneficial to our Company. Correspondingly, we are exploring strategic acquisition candidates that will expand our addressable market. We are confident that increasing the number of strategic partners along with targeted acquisitions are excellent pathways to expand our customer base and substantially grow our business.”

Mr. Singh added, “The main initiative impacting near-term results is our substantial investments in Brink which are specifically focused on accelerating our development capabilities. We look at this as investment spend with a strong return profile and we will continue to push down this path. We continue to be challenged by reduced year-over-year revenues in our hardware business due to the inherent cyclical nature of this industry. However, our focus on cost reductions and capital returns has allowed this business to remain profitable. We will continue to take the necessary steps to address the challenges and impact of the current business environment regarding our hardware platforms.”

Conference Call.

There will be a conference call at 4:30 p.m. (Eastern) on August 6, 2019, during which the Company’s management will discuss the financial results for the second quarter ended June 30, 2019. To participate in the call, please call 844-419-5412, approximately 10 minutes in advance. No passcode is required to participate in the live call or to listen to the replay version. Individual & Institutional Investors will have the opportunity to listen to the conference call/event over the internet by visiting the Company’s website at www.partech.com/about-us/investors. Alternatively, listeners may access an archived version of the presentation call after 7:30 p.m. on August 6, 2019 through August 13, 2019 by dialing 855-859-2056 and using conference ID 2685529.

About PAR Technology Corporation.

PAR Technology Corporation's stock is traded on the New York Stock Exchange under the symbol “PAR”. PAR’s Restaurant/Retail reporting segment has been a leading provider of restaurant and retail technology for more than 40 years. PAR offers management technology solutions for the full spectrum of restaurant operations, from large chain and independent table service restaurants to international quick service chains. PAR products can be found in retailers, cinemas, cruise lines, stadiums, and food service companies. PAR’s Government reporting segment is a leader in providing computer-based system design, engineering and technical services to the Department of Defense and various federal agencies. For more information visit http://www.partech.com/about-us/investors or connect with us on Facebook and Twitter.

Forward-Looking Statements.

This press release includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, Section 27A of the Securities Act of 1933, as amended, and the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include delays in new product development and/or product introduction; changes in customer base and product, and service demands, including changes in product or service demands by the two customers from whom a significant portion of our revenue is derived and the other factors discussed in our most recent Annual Report on Form 10-K and other filings with the SEC. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

PAR TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)

Assets

June 30,
2019

 

December 31,
2018

Current assets:

 

 

 

Cash and cash equivalents

$

58,661

 

 

$

3,485

 

Accounts receivable-net

25,886

 

 

26,219

 

Inventories-net

20,433

 

 

22,737

 

Asset held for sale

2,477

 

 

 

Other current assets

6,657

 

 

3,251

 

Total current assets

114,114

 

 

55,692

 

Property, plant and equipment – net

13,641

 

 

12,575

 

Goodwill

11,051

 

 

11,051

 

Intangible assets – net

8,555

 

 

10,859

 

Operating lease right-of-use assets

3,323

 

 

 

Other assets

4,388

 

 

4,504

 

Total Assets

155,072

 

 

$

94,681

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Borrowings on line of credit

$

 

 

$

7,819

 

Accounts payable

10,434

 

 

12,644

 

Accrued salaries and benefits

5,700

 

 

5,940

 

Accrued expenses

2,257

 

 

2,113

 

Operating lease liabilities - current portion

1,206

 

 

 

Customer deposits and deferred service revenue

10,736

 

 

9,851

 

Other current liabilities

 

 

2,550

 

Total current liabilities

30,333

 

 

40,917

 

Operating lease liabilities - net of current portion

2,153

 

 

 

Deferred service revenue

4,343

 

 

4,407

 

Long-term debt

59,255

 

 

 

Other long-term liabilities

3,201

 

 

3,411

 

Total liabilities

99,285

 

 

48,735

 

Commitments and contingencies

 

 

 

Shareholders’ Equity:

 

 

 

Preferred stock, $.02 par value, 1,000,000 shares authorized

 

 

 

Common stock, $.02 par value, 29,000,000 shares authorized; 18,005,785 and
17,879,761 shares issued, 16,297,176 and 16,171,652 outstanding at June 30,
2019 and December 31, 2018, respectively

360

 

 

357

 

Capital in excess of par value

63,806

 

 

50,251

 

Retained earnings

1,589

 

 

5,427

 

Accumulated other comprehensive loss

(4,132

)

 

(4,253

)

Treasury stock, at cost, 1,708,109 shares

(5,836

)

 

(5,836

)

Total shareholders’ equity

55,787

 

 

45,946

 

Total Liabilities and Shareholders’ Equity

$

155,072

 

 

$

94,681

 

PAR TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Net revenues:

 

 

 

 

 

 

 

Product

$

14,728

 

 

$

20,883

 

 

$

30,245

 

 

$

47,207

 

Service

13,534

 

 

13,944

 

 

27,577

 

 

27,140

 

Contract

15,985

 

 

17,744

 

 

31,107

 

 

33,885

 

 

44,247

 

 

52,571

 

 

88,929

 

 

108,232

 

Costs of sales:

 

 

 

 

 

 

 

Product

11,412

 

 

15,339

 

 

22,653

 

 

34,779

 

Service

9,876

 

 

10,205

 

 

19,903

 

 

19,752

 

Contract

14,386

 

 

15,667

 

 

28,036

 

 

30,494

 

 

35,674

 

 

41,211

 

 

70,592

 

 

85,025

 

Gross margin

8,573

 

 

11,360

 

 

18,337

 

 

23,207

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

9,059

 

 

9,020

 

 

17,623

 

 

17,620

 

Research and development

2,725

 

 

3,222

 

 

5,785

 

 

6,090

 

Amortization of identifiable intangible assets

242

 

 

242

 

 

483

 

 

483

 

 

12,026

 

 

12,484

 

 

23,891

 

 

24,193

 

Operating loss income

(3,453

)

 

(1,124

)

 

(5,554

)

 

(986

)

Other expense, net

(374

)

 

(384

)

 

(804

)

 

(335

)

Interest expense, net

(1,244

)

 

(78

)

 

(1,390

)

 

(119

)

Loss before benefit from income taxes

(5,071

)

 

(1,586

)

 

(7,748

)

 

(1,440

)

Benefit from income taxes

3,962

 

 

263

 

 

3,910

 

 

185

 

Net loss

$

(1,109

)

 

$

(1,323

)

 

$

(3,838

)

 

$

(1,255

)

Basic Loss per Share:

 

 

 

 

 

 

 

Net loss

$

(0.07

)

 

$

(0.08

)

 

$

(0.24

)

 

$

(0.08

)

Diluted Loss per Share:

 

 

 

 

 

 

 

Net loss

$

(0.07

)

 

$

(0.08

)

 

$

(0.24

)

 

$

(0.08

)

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

16,290

 

 

16,330

 

 

16,085

 

 

15,993

 

Diluted

16,290

 

 

16,330

 

 

16,085

 

 

15,993

 

PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share and per share data)
(Unaudited)

 

 

For the three months ended June 30, 2019

For the three months ended June 30, 2018

 

 

Reported basis (GAAP)

 

Adjustments

 

Comparable basis (Non-GAAP)

 

Reported basis (GAAP)

 

Adjustments

 

Comparable basis (Non-GAAP)

Net revenues

 

$

44,247

 

 

$

 

 

$

44,247

 

$

52,571

 

$

 

 

$

52,571

Costs of sales

 

35,674

 

 

1,369

 

 

34,305

 

41,211

 

 

 

41,211

Gross margin

 

8,573

 

 

1,369

 

 

9,942

 

11,360

 

 

 

11,360

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

9,059

 

 

702

 

 

8,357

 

9,020

 

641

 

 

8,379

Research and development

 

2,725

 

 

 

 

2,725

 

3,222

 

 

 

3,222

Acquisition amortization

 

242

 

 

242

 

 

 

242

 

242

 

 

Total operating expenses

 

12,026

 

 

944

 

 

11,082

 

12,484

 

883

 

 

11,601

Operating (loss) income

 

(3,453

)

 

2,313

 

 

(1,140)

 

(1,124)

 

883

 

 

(241)

Other expense, net

 

(374

)

 

 

 

(374)

 

(384)

 

 

 

(384)

Interest (expense) income, net

 

(1,244

)

 

573

 

 

(671)

 

(78)

 

 

 

(78)

(Loss) income before benefit from (provision for) income taxes

 

(5,071

)

 

2,886

 

 

(2,185)

 

(1,586)

 

883

 

 

(703)

Benefit from (provision for) income taxes

 

3,962

 

 

(4,758

)

 

(796)

 

263

 

(212

)

 

51

Net loss

 

(1,109

)

 

 

 

(2,981)

 

(1,323)

 

 

 

(652)

Loss per diluted share

 

(0.07

)

 

 

 

(0.18)

 

(0.08)

 

 

 

(0.04)

About Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP. However, non-GAAP adjusted financial measures, as set forth in the reconciliation table above, are provided because management uses these non-GAAP financial measures in evaluating the results of the Company's continuing operations and believes this information provides investors supplemental insight into underlying business trends and operating results. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, these non-GAAP financial measures should be read in conjunction with the Company’s financial statements prepared in accordance with GAAP.

The Company's results of operations are impacted by certain non-recurring charges, including equity based compensation, acquisition related expenditures, expense related to the internal investigation into conduct in China and Singapore (the "China/Singapore internal investigation") and the SEC document subpoena, and other non-recurring charges that may not be indicative of the Company’s financial performance. Management believes that adjusting its operating expenses, operating loss, net loss and diluted loss per share to remove non-recurring charges provides a useful perspective with respect to our operating results and provides supplemental information to both management and investors by removing items that are difficult to predict and are often unanticipated. While the Company believes the adjustments provide a useful comparison, the reconciliations of non-GAAP financial measures to corresponding GAAP measures should be carefully evaluated.

During the second quarter of 2019, the Company recorded $1,369,000 of expenses related to the expected sale of the SureCheck product group within the Restaurant/Retail reporting segment, this represents $581,000 included in costs of sales related to a reserve for inventory and $788,000 in costs of service related to impairment of intangible assets for the SureCheck product group. The Company recorded $100,000 of expenses related to the China/Singapore internal investigation and the SEC document subpoena. Additionally, $602,000 of equity based compensation charges were recorded during the second quarter of 2019. The Company recognized amortization of acquired intangible assets of $242,000 related to the Company’s 2014 acquisition of Brink Software, Inc. (the "Brink Acquisition"). The provision for income tax line above is netted down by a 24%, or $693,000, tax impact from non-GAAP adjustments as well as a $4,065,000 tax adjustment relating to the sale of $80 million of 4.5% convertible senior notes in April 2019 (the "Notes"). Further, the Company recognized $573,000 accretion of interest related to the Notes.

During the second quarter of 2018, the Company recorded $314,000 of expenses related to the China/Singapore internal investigation and the SEC document subpoena. Additionally, $250,000 of equity based compensation charges were recorded during the second quarter of 2018. There were $77,000 of severance expenses recorded in the second quarter related to the closing of the Company's facility in France. The Company recognized amortization of acquired intangible assets of $242,000 related to the Brink Acquisition. The benefit from income tax was decreased by 24%, or $212,000, to reflect the tax impact from non-GAAP adjustments.

PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share and per share data)
(Unaudited)

 

 

For the six months ended June 30, 2019

For the six months ended June 30, 2018

 

 

Reported basis (GAAP)

 

Adjustments

 

Comparable basis (Non-GAAP)

 

Reported basis (GAAP)

 

Adjustments

 

Comparable basis (Non-GAAP)

Net revenues

 

$

88,929

 

 

$

 

 

$

88,929

 

$

108,232

 

$

 

 

$

108,232

Costs of sales

 

70,592

 

 

1,512

 

 

69,080

 

85,025

 

 

 

85,025

Gross margin

 

18,337

 

 

1,512

 

 

19,849

 

23,207

 

 

 

23,207

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

17,623

 

 

1,457

 

 

16,166

 

17,620

 

1,119

 

 

16,501

Research and development

 

5,785

 

 

108

 

 

5,677

 

6,090

 

 

 

6,090

Acquisition amortization

 

483

 

 

483

 

 

 

483

 

483

 

 

Total operating expenses

 

23,891

 

 

2,048

 

 

21,843

 

24,193

 

1,602

 

 

22,591

Operating (loss) income

 

(5,554

)

 

3,560

 

 

(1,994)

 

(986)

 

1,602

 

 

616

Other expense, net

 

(804

)

 

 

 

(804)

 

(335)

 

 

 

(335)

Interest (expense) income, net

 

(1,390

)

 

573

 

 

(817)

 

(119)

 

 

 

(119)

(Loss) income before provision for income taxes

 

(7,748

)

 

4,133

 

 

(3,615)

 

(1,440)

 

1,602

 

 

162

Benefit from (provision for) income taxes

 

3,910

 

 

(5,057

)

 

(1,147)

 

185

 

(384

)

 

(199)

Net loss

 

(3,838

)

 

 

 

(4,762)

 

(1,255)

 

 

 

(37)

Loss per diluted share

 

(0.24

)

 

 

 

(0.30)

 

(0.08)

 

 

 

0.00

During the first six months of 2019, the Company recorded $1,369,000 of expenses related to the expected sale of the SureCheck product group within Restaurant/Retail reporting segment, this represents $581,000 related to reserve for inventory and $788,000 in costs of service related to impairment of intangible assets for the SureCheck product group. The Company recorded $290,000 of expenses related to the China/Singapore internal investigation and the SEC document subpoena and severance expenses of $143,000 in cost of sales and $317,000 in selling, general and administrative expenses and $108,000 in research and development expenses. Additionally, $850,000 of equity based compensation charges were recorded during the second quarter of 2019. The Company recognized amortization of acquired intangible assets of $483,000 related to the Brink Acquisition. The provision for income tax line above is netted down by a 24%, or $992,000 tax impact from non-GAAP adjustments as well as a $4,065,000 tax adjustment relating to the sale of the Notes. Further, the Company recognized $573,000 accretion of interest related to the Notes.

During the six months ended June 30, 2018, the Company recorded $611,000 of expenses related to the China/Singapore internal investigation and the SEC document subpoena. Additionally, $431,000 of equity based compensation charges were recorded during the first six months of 2018. There were $77,000 of severance expenses recorded in the first six months of 2018 related to the closing of the Company's facility in France which had been recorded in selling, general and administrative expenses. The Company recognized amortization of acquired intangible assets of $483,000 related to the Brink Acquisition. The benefit from income tax was decreased by 24%, or $384,000, to reflect the tax impact from non-GAAP adjustments.

Contacts

Christopher R. Byrnes (315) 738-0600 ext. 6226
cbyrnes@partech.com, www.partech.com

Contacts

Christopher R. Byrnes (315) 738-0600 ext. 6226
cbyrnes@partech.com, www.partech.com