MAMS MAM Software Group Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 15, 2016

 

 

MAM SOFTWARE GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Delaware	000-27083	84-1108035
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

  

Maple Park, Maple Court, Tankersley, Barnsley, UK S75 3DP

 (Address of principal executive offices, including zip code)

 

Registrant's telephone number, including area code: 011 44 124 431 1794 

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On February 15, 2016, MAM Software Group, Inc. (the “Company”) issued a press release announcing its financial and operational results for the fiscal quarter ended December 31, 2015 (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

In accordance with General Instruction B.2 of Form 8-K, the information in this Form 8-K (including Exhibit 99.1) is being “furnished,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)

Exhibits:

 

99.1

Press Release of MAM Software Group, Inc., dated February 15, 2016.

 

 

 

 

SIGNATURES

  

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Dated: February 15, 2016	MAM SOFTWARE GROUP, INC.
	By:	/s/ Brian H. Callahan
		Name: Brian H. Callahan Title: Chief Financial Officer

  

 

 

 

 

 

 

 

Exhibit 99.1

 

 

 

 

MAM Software Reports Fiscal Second Quarter Results

 

Delivers Steady Progress; Increases Recurring Revenues to 80% of Total Revenues

  

BARNSLEY, England, February 15, 2016 /PRNewswire/ -- MAM Software Group, Inc. (NASDAQ Capital Market: MAMS) (the "Company" or "MAM"), a leading global provider of on-premise and cloud-based business management solutions for the auto parts, tire and vertical distribution industries, announced the following financial results in accordance with U.S. generally accepted accounting principles (“GAAP”) for its second fiscal quarter ended December 31, 2015:

 

(In thousands, except share and per share data)		For The Three Months Ended December 31,								For The Six Months Ended December 31,
		2015				2014				2015				2014
Revenues		$	7,901			$	7,871			$	15,896			$	16,078
Gross profit		$	4,333			$	4,662			$	8,678			$	9,564
Operating income		$	758			$	1,128			$	1,782			$	1,940
Income before provision for income taxes		$	931			$	1,127			$	1,945			$	1,935
Net income		$	738			$	925			$	1,568			$	1,534
Earnings per share attributed to common stockholders – basic		$	0.06			$	0.07			$	0.12			$	0.11
Earnings per share attributed to common stockholders – diluted		$	0.06			$	0.07			$	0.12			$	0.11
Weighted average shares outstanding – basic			12,907,105				13,423,060				13,150,831				13,310,927
Weighted average shares outstanding – diluted			13,005,870				13,554,977				13,247,978				13,405,524

 

Michael Jamieson, MAM’s President and Chief Executive Officer commented, “We continue to make progress in transitioning to a cloud-based business model, while simultaneously and effectively managing multiple, large-scale implementations for our customers. During the quarter our recurring revenue grew to an all-time high of 80% of total revenue, reflecting our customers’ enthusiasm for our offerings. Organic revenue growth of 4% was again offset by a significant foreign currency impact from our U.K. business. Despite this, the climate for cloud-based business solutions in the automotive vertical remains positive, as SaaS revenue grew 45% year-over-year and 11% sequentially. Taking everything into account, we are pleased with the progress made during the quarter. The large scale projects that we are focusing on today will help position us for future growth and we remain very excited about the opportunities in front of us.”

 

Second Quarter Highlights:

 

●

Revenues were $7.9 million versus $7.9 million for the same period last year. On a constant currency basis, total revenues would have been $8.2 million, or an increase of 4% over the same period last year.

 

●

Recurring revenues were 80% of total revenues compared to 74% of total revenues for the same period last year.

 

●

Total Software as a Service (SaaS) revenue increased 45% year-over-year and 11% sequentially.

 

●

Operating income was $758,000, or 10% of revenues, versus $1.1 million, or 14% of revenues, for the same period last year.

 

●

Adjusted EBITDA* was $1.3 million, or 16% of revenues, versus $1.5 million, or 19% of revenues, for the same period last year.

 

●

Net income was $738,000, as compared to $925,000 in the same period last year.

 

 

 

Second Quarter Financial Results:

 

Revenues were $7.9 million for the quarter ended December 31, 2015, versus $7.9 million for the same period last year, an increase of $30,000.

 

●

On a constant currency basis, revenue was up 4% over the same period last year.

 

●

Recurring revenue for the quarter was $6.3 million, or 80% of total revenues, an increase of $470,000 or 8%, over $5.8 million, or 74% of total revenues, for the same period last year. Sequentially, recurring revenue increased $46,000, or 1%, compared to $6.3 million in the fiscal first quarter of 2016. The increase was due to the transition to Software as a Service (SaaS) model.

 

o

Total Software as a Service (SaaS) revenue for the quarter was $1.7 million, an increase of $528,000, or 45%, year-over-year, and an increase of $163,000, or 11%, sequentially when compared to the fiscal first quarter of 2016. The increase in the SAAS revenue was primarily attributable to a 29% increase in Autowork Online (SaaS) revenue for the quarter to $1,059,000, and an 83% increase in Autopart Online (SaaS) revenue for the quarter to $642,000.

 

o

Total Data as a Service (DaaS) revenue for the quarter was $2.4 million, an increase of $22,000, or 1%, year over year, but a decrease of $115,000, or 5%, sequentially when compared to the fiscal first quarter of 2016.

 

Gross profit for the quarter was $4.3 million, or 55% of total revenues, a decrease of $329,000 compared to $4.7 million, or 59% of total revenues, for the same period last year. The decrease in gross profit margins was primarily the result of an increase in lower margin equipment sales in the three months ended December 31, 2015, higher margin special project revenue in the same period last year, and an increase professional services headcount to support growth.

 

Operating expenses for the quarter increased by $41,000 to $3.6 million, an increase of 1% as compared to the $3.5 million for the same period last year. An increase in research and development expenses from additional resources to support new client developments was offset by lower sales, marketing and administrative expenses.

 

Operating income for the quarter decreased by $370,000, or 33%, to $758,000, as compared to $1.1 million, for the same period last year.

 

Other income for the quarter included a $217,000 gain from the settlement of liabilities with certain vendors and net interest expense of $44,000 primarily as a result of borrowings incurred in connection with a tender offer.

 

Net income for the quarter decreased by $187,000, or 20% to $738,000, or $0.06 per basic and diluted share, compared to net income of $925,000, or $0.07 per basic and diluted share, for the same period last year.

 

Year-to-Date Highlights

 

●

Total revenues were $15.9 million, a decrease of 1% compared to $16.1 million in the same period last year. On a constant currency basis, total revenues would have been $16.6 million, or an increase of 3% over the same period last year.

 

●

Recurring revenues were 79% of total revenues compared to 73% in the same period last year.

 

●

Total Software as a Service (SaaS) revenue increased 44%.

 

●

Operating income was $1.8 million, or 11% of revenues, versus $1.9 million, or 12% of revenues, for the same period last year.

 

●

Adjusted EBITDA* was $2.5 million, or 16% of revenues, versus $2.6 million, or 16% of revenues, for the same period last year.

 

●

Net income was $1.6 million as compared to $1.5 million in the same period last year.

 

 

 

 

Second Quarter Year-to-Date Financial Results:

 

Revenues were $15.9 million for the six months ended December 31, 2015, versus $16.1 million for the same period last year, a decrease of $182,000, or 1%.

 

●

On a constant currency basis, revenue was up 3% over the same period last year.

 

●

Recurring revenue for the six months was $12.6 million, or 79% of total revenue, an increase of $764,000, or 6%, over $11.8 million, or 73% of total revenue for the same period last year.

 

o

Total Software as a Service (SaaS) revenue for the six months was $3.2 million, an increase of $985,000, or 44%, year-over-year. The increase in the SAAS revenue was primarily attributable to a 28% increase in Autowork Online (SaaS) revenue for the six months to $2.0 million, and an 82% increase in Autopart Online (SaaS) revenue for the six months to $1.2 million.

 

o

Total Data as a Service (DaaS) revenue for the six months was $4.9 million, an increase of $57,000, or 1%, year over year.

 

Gross profit for the six months ended December 31, 2015 was $8.7 million, or 55% of total revenue, a decrease of $886,000, compared to $9.6 million, or 59% of total revenue, for the same period last year. The decrease in gross profit margins was primarily the result of an increase in lower margin equipment sales in the six months ended December 31, 2015, higher margin special project revenue in the same period last year, and an increase professional services headcount to support growth.

 

Operating expenses for the six months ended December 31, 2015 decreased by $728,000 to $6.9 million, a decrease of 10% as compared to $7.6 million for the same period last year. The decrease was primarily the result of an increase in the capitalization of payroll costs of engineering personnel, adjustments to the management incentive plan, realignment of the U.S. management structure in 2015, and strategic goal incentives in the first quarter of last year.

 

Operating income for the six months ended December 31, 2015 decreased by $158,000, or 8%, to $1.8, as compared to $1.9 million, for the same period last year.

 

Other income for the six months ended December 31, 2015 included a $217,000 gain from the settlement of liabilities with certain vendors and net interest expense of $54,000 primarily as a result of borrowings incurred in connection with a tender offer.

 

Net income for the six months ended December 31, 2015 increased by $34,000, or 2%, to $1.6 million, or $0.12 per basic and diluted share, compared to net income of $1.5 million, or $0.11 per basic and diluted share, for the same period last year.

 

Balance Sheet and Other Financial Highlights:

 

●

The Company finished the quarter with $1.3 million in cash after capital expenditures and capitalized software development costs of $1.4 million and utilizing $4.5 million of cash to fund a portion of the repurchase of 2,000,000 shares of common stock for a total purchase price of $15 million in a public tender offering.

 

●

As of December 31, 2015, the Company had $10.5 million of debt outstanding under its $12 million credit facility, which was used to fund a portion of the tender offer.

 

●

Stockholders' equity decreased $14.3 million, or 78%, to $4.1 million as a result of the tender offer.

 

●

System backlog was $1.9 million, with more than half of this business expected to be fulfilled during the next six months.

 

●

As of December 31, 2015, MAM Software had 12.4 million shares of common stock outstanding.

 

“By completing the tender offer of two million shares during the quarter, we demonstrated our commitment to returning capital to our shareholders and better aligned our capital structure in light of the current interest rate environment and the future growth opportunities we believe are before us,” added Brian Callahan, MAM’s Executive Vice President and Chief Financial Officer.

 

Business Outlook 2016

 

The Company’s previously announced expectation for fiscal year 2016 Adjusted EBITDA* in the range of $5.8 million to $6.0 million was based on various assumptions including the foreign currency exchange rates. Based largely upon the continuing impact of foreign currency exchange rates, the Company now expects Adjusted EBITDA for fiscal year 2016 to be in the range of $5.0 million to $5.2 million.

 

 

 

Conference Call Information

 

The Company has scheduled a conference call for Tuesday, February 16, 2016, at 9 a.m. ET to review the results. Investors and interested parties can access the conference call by dialing:

 

●

Toll-Free: 888-430-8694

 

●

Toll/International: 719-325-2281

 

●

UK Toll-Free: 0 800 404 7655

 

A replay will be available until February March 1, 2016 by calling 877-870-5176 (United States) or 1-858-384-5517 (toll/UK/international). Please use pin number 6564992 for the replay.

 

A live webcast as well as a replay of the call will be accessible at the investor relations section of the Company's website, www.mamsoftware.com. The replay will be active for 60 days following the conference call.

 

About MAM Software Group, Inc.

 

MAM Software is a leading global provider of on-premise and cloud-based business management solutions for the auto parts, tire and vertical distribution industries. The company provides a portfolio of innovative software (SaaS and packaged), data (DaaS), and integration (iPaaS) services that enable businesses to intelligently manage core business processes, control costs and generate new profit opportunities. MAM's integrated platforms provide a wealth of rich functionality including: point-of-sale, inventory, purchasing, reporting, data and e-commerce. Wholesale, retail and installer business across North America, the U.K. and Ireland rely on MAM solutions, backed by dedicated teams of experienced service and support professionals. For further information, please visit http://www.mamsoftware.com.

 

 

*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted to exclude non-cash equity compensation. A reconciliation of adjusted EBITDA to net income (loss) can be found at the end of the following tables. Adjusted EBITDA is commonly used by management and investors as an indicator of operating performance and liquidity. Adjusted EBITDA is not considered a measure of financial performance under GAAP and it should not be considered as an alternative to net income (loss), or other financial statement data presented in accordance with GAAP in our consolidated financial statements.

 

 

Safe Harbor Statement

 

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company's business including, increased competition; the ability of the Company to expand its operations through either acquisitions or internal growth, to attract and retain qualified professionals, and to expand commercial relationships; technological obsolescence; foreign currency fluctuations; general economic conditions; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.

 

 

Contact:

 

MAM Software

Brian H. Callahan

Chief Financial Officer

610-336-9045 ext. 240

 

Hayden IR

James Carbonara

Regional Vice President

james@haydenir.com

646-755-7412

 

 

 

 

MAM SOFTWARE GROUP, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

		December 31, 2015				June 30, 2015
			(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	1,260			$	6,793
Accounts receivable, net of allowance of $319 and $221, respectively			3,867				4,243
Inventories			284				185
Prepaid expenses and other current assets			1,127				1,722
Total Current Assets			6,538				12,943
Property and Equipment, Net			607				732
Other Assets
Goodwill			9,001				9,202
Amortizable intangible assets, net			917				-
Software development costs, net			4,141				3,010
Other long-term assets			154				34
TOTAL ASSETS		$	21,358			$	25,921
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable		$	1,514			$	1,978
Accrued expenses and other current liabilities			1,908				2,624
Payroll and other taxes			730				747
Current portion of long-term debt			1,900				-
Current portion of deferred revenue			682				719
Sales tax payable			781				850
Income tax payable			340				356
Total Current Liabilities			7,855				7,274
Long-Term Liabilities
Deferred revenue, net of current portion			42				52
Deferred income taxes			229				58
Long-term debt, net of current portion			8,600				-
Other long-term liabilities			569				140
Total Liabilities			17,295				7,524
Commitments and Contingencies
Stockholders' Equity
Preferred stock: Par value $0.0001 per share; 2,000,000 shares authorized, none issued and outstanding			-				-
Common stock: Par value $0.0001 per share; 18,000,000 shares authorized, 13,224,675 shares issued and 12,434,887 shares outstanding at December 31, 2015, and 15,027,057 shares issued and 14,266,964 shares outstanding at June 30, 2015			1				2
Additional paid-in capital			16,262				31,186
Accumulated other comprehensive loss			(2,057	)			(1,241	)
Accumulated deficit			(7,769	)			(9,337	)
Treasury stock at cost, 789,788 shares at December 31, 2015, and 760,093 shares at June 30, 2015			(2,374	)			(2,213	)
Total Stockholders' Equity			4,063				18,397
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	21,358			$	25,921

 

 

 

 

MAM SOFTWARE GROUP, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands, except share and per share data)

 

		For the Three Months Ended								For the Six Months Ended
		December 31,								December 31,
		2015				2014				2015				2014
Revenues, net		$	7,901			$	7,871			$	15,896			$	16,078
Cost of revenues			3,568				3,209				7,218				6,514
Gross profit			4,333				4,662				8,678				9,564
Operating expenses
Research and development			984				858				1,814				1,881
Sales and marketing			1,040				1,155				2,111				2,315
General and administrative			1,368				1,389				2,635				3,070
Depreciation and amortization			183				132				336				358
Total operating expenses			3,575				3,534				6,896				7,624
Operating income			758				1,128				1,782				1,940
Other income (expense):
Interest expense, net			(44	)			(1	)			(54	)			(5	)
Gain on settlement of liabilities			217				-				217				-
Total other income (expense), net			173				(1	)			163				(5	)
Income before provision for income taxes			931				1,127				1,945				1,935
Provision for income taxes			193				202				377				401
Net income		$	738			$	925			$	1,568			$	1,534
Earnings per share attributed to common stockholders:
Basic		$	0.06			$	0.07			$	0.12			$	0.11
Diluted		$	0.06			$	0.07			$	0.12			$	0.11
Weighted average shares outstanding:
Basic			12,907,105				13,423,060				13,150,831				13,310,927
Diluted			13,005,870				13,554,977				13,247,978				13,405,524
Net income		$	738			$	925			$	1,568			$	1,534
Foreign currency translation loss			(211	)			(598	)			(816	)			(1,253	)

 

 

 

 

 

 

MAM SOFTWARE GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

		For the Six Months Ended December 31,
		2015				2014
Cash flows from operating activities:
Net income		$	1,568			$	1,534
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense			146				80
Depreciation and amortization			336				358
Amortization of debt issuance costs			5				-
Stock based compensation			142				349
Deferred income taxes			(31	)			(20	)
Changes in assets and liabilities:
Accounts receivable			297				(122	)
Inventories			(113	)			(78	)
Prepaid expenses and other assets			479				(225	)
Accounts payable			(412	)			(471	)
Payroll and other taxes payable			(1	)			73
Deferred revenue			(86	)			(2	)
Accrued expenses and other liabilities			(808	)			(866	)
Sales tax payable			(57	)			(67	)
Net cash provided by operating activities			1,465				543
Cash flows from investing activities:
Purchase of property and equipment			(51	)			(272	)
Business acquisition, net of cash acquired			(453	)			-
Capitalized software development costs			(1,345	)			(729	)
Net cash used in investing activities			(1,849	)			(1,001	)
Cash flows from financing activities:
Repurchase of common stock for treasury			(161	)			(187	)
Repurchase of common stock			(15,000	)			-
Payment of fees for acquisition of debt			(60	)			-
Payment of fees for repurchase of common stock			(118	)			-
Proceeds from the credit facility			10,500				-
Net cash used in financing activities			(4,839	)			(187	)
Effect of exchange rate changes			(310	)			(630	)
Net change in cash and cash equivalents			(5,533	)			(1,275	)
Cash and cash equivalents, beginning of period			6,793				7,008
Cash and cash equivalents, end of period		$	1,260			$	5,733

 

 

 

 

MAM SOFTWARE GROUP, INC.

Calculation of Adjusted Earnings before Interest, Taxes, Depreciation,

and Amortization (Non-GAAP) (unaudited, includes non-cash compensation)

 

		For the Three								For the Six								For the Trailing Twelve
		Months Ended December 31,								Months Ended December  31,								Months Ended December  31,
(in thousands)		2015				2014				2015				2014				2015
Net Income (GAAP)			738			$	925			$	1,568			$	1,534			$	3,039
Interest expense, net			44				1				54				5				62
Provision for income taxes			193				202				377				401				798
Depreciation and amortization			183				132				336				358				577
Non-cash stock compensation			101				201				142				349				355
Adjusted EBITDA (Non-GAAP)			1,259			$	1,461			$	2,477			$	2,647			$	4,831