PAR PAR Technology Corp

Revenues Grow 10.3% in the Quarter – 7.9% in the First Six Months of 2015

PAR Technology Corporation (NYSE:PAR) today announced results for the second quarter ended June 30, 2015.

Summary of Fiscal 2015 Second Quarter and Year-to-Date Financial Results

• Revenue increased 10.3% to $63.3 million in the second quarter of fiscal 2015, compared to $57.4 million in the same period in 2014.
• Non-GAAP net income in the second quarter of fiscal 2015 was $0.6 million, or $0.04 per diluted share, compared to a non-GAAP net loss of $0.3 million, or $0.02 loss per share, in the same period in 2014.
• GAAP net income in the second quarter of fiscal 2015 was $0.1 million, or $0.01 per diluted share, compared to a GAAP net loss of $0.5 million, or $0.03 loss per share, in the same period in 2014.
• Revenue increased 7.9% to $122.9 million in the first six months of fiscal 2015, compared to $113.9 million in the same period in 2014.
• Non-GAAP net income in the first six months of fiscal 2015 was $0.6 million, or $0.04 per diluted share, compared to a non-GAAP net loss of $1.0 million or $0.06 loss per share, in the same period in 2014.
• GAAP net loss in the first six months of fiscal 2015 was $0.3 million or $0.02 loss per share, compared to a GAAP net loss of $1.5 million, or $0.10 loss per share, in the same period in 2014.

Commenting on the second quarter results, Ronald J. Casciano, Chief Executive Officer & President, stated, “We are pleased with the quarterly performance and the progress being made in both of our business segments as they delivered revenue and income growth in the quarter. We are seeing strong interest in our new hospitality technology products, specifically our Brink POS™ software, and are encouraged by the recent new customer wins in this segment. Our Government segment also had a strong second quarter and delivered double digit revenue growth and improved profits for the quarter when compared to the same period in 2015. Going forward we fully expect to build upon our recent progress by focusing on alignment, innovation and execution to compete and succeed in the markets we serve.”

The Company previously stated its intention to make strategic and operational improvements involving its hospitality segment, primarily in its international operations to focus on global delivery of its software solutions. This restructuring realigns sales and support functions with US-based operations, increases efficiencies and reduces operating costs. In connection with this restructuring, the Company’s GAAP results include a one-time pre-tax charge in the second quarter of $416,000.

A reconciliation and description of non-GAAP financial measures to their comparable GAAP financial measures are included in the tables following this news release.

Certain Company information in this release or statements made by its spokespersons from time to time may contain forward-looking statements. Any statements in this document that do and not describe historical facts are forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including without limitation, delays in new product introduction, risks in technology development and commercialization, risks in product development and market acceptance of and demand for the Company’s products, risks of downturns in economic conditions generally, and in the quick service sector of the restaurant market specifically, risks of intellectual property rights associated with competition and competitive pricing pressures, risks associated with foreign sales and high customer concentration, and other risks detailed in the Company’s filings with the Securities and Exchange Commission.

About PAR Technology Corporation

PAR Technology Corporation's stock is traded on the New York Stock Exchange under the symbol PAR. PAR’s Hospitality segment has been a leading provider of restaurant and retail technology for more than 30 years. PAR offers technology solutions for the full spectrum of restaurant operations, from large chain and independent table service restaurants to international quick service chains. PAR’s Hospitality business also provides hotel management systems with a complete suite of powerful tools for guest management, recreation management, and timeshare/condo management. In addition, PAR offers the spa industry a leading management application specifically designed to support the unique needs of the resort spa and day spa markets, a rapidly growing hospitality segment. Products from PAR also can be found in retailers, cinemas, cruise lines, stadiums and food service companies. PAR’s Government Business is a leader in providing computer-based system design, engineering and technical services to the Department of Defense and various federal agencies. Visit www.partech.com for more information.

There will be a conference call at 4:45 p.m. (Eastern) on August 6, 2015, during which the Company’s management will discuss the financial results for the second quarter of 2015. To participate in the call, please call 866-868-9502, 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 PAR’s website at www.partech.com. Alternatively, listeners may access an archived version of the presentation call through August 13, 2015 by dialing 855-859-2056.

 

PAR TECHNOLOGY CORPORATIONCONSOLIDATED BALANCE SHEETS(in thousands, except share amounts)(Unaudited)

    June 30,   December 31,

Assets

2015 2014 Current assets: Cash and cash equivalents $ 5,136 $ 10,167 Accounts receivable-net 34,467 31,445 Inventories-net 24,936 25,922 Deferred income taxes 5,583 4,512 Other current assets   4,352       4,597   Total current assets 74,474 76,643 Property, plant and equipment - net 6,353 6,135 Deferred income taxes 10,948 11,357 Goodwill 17,167 17,167 Intangible assets - net 22,863 22,952 Other assets   3,676       3,043  

Total Assets

$ 135,481     $ 137,297  

Liabilities and Shareholders’ Equity

Current liabilities: Current portion of long-term debt $ 3,176 $ 3,173 Borrowings under line of credit 3,276 5,000 Accounts payable 15,422 19,676 Accrued salaries and benefits 6,376 6,429 Accrued expenses 6,150 6,578 Customer deposits 4,078 2,345 Deferred service revenue 16,175 12,695 Income taxes payable   373       475   Total current liabilities 55,026 56,371 Long-term debt 2,528 2,566 Other long-term liabilities   8,765       8,847   Total liabilities   66,319       67,784   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; 17,250,209 and 17,274,708 sharesissued; 15,542,100 and 15,566,599 outstanding

345 346 Capital in excess of par value 45,066 44,854 Retained earnings 31,181 31,465 Accumulated other comprehensive loss (1,594 ) (1,316 ) Treasury stock, at cost, 1,708,109 shares   (5,836 )     (5,836 ) Total shareholders’ equity   69,162       69,513   Total Liabilities and Shareholders’ Equity $ 135,481     $ 137,297      

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

   

For the threemonths endedJune 30,

For the threemonths endedJune 30,

       

For the sixmonths endedJune 30,

 

For the sixmonths endedJune 30,

  2015 2014     2015   2014   Net revenues: Product $ 25,802 $ 22,953 $ 47,488 $ 41,545 Service 15,929 14,920 30,031 29,170 Contract   21,561     19,529     45,397     43,228     63,292     57,402     122,916     113,943   Costs of sales: Product 18,172 15,815 33,013 28,718 Service 10,404 10,831 19,724 20,384 Contract   20,189     18,495     42,663     40,567     48,765     45,141     95,400     89,669   Gross margin   14,527     12,261     27,516     24,274   Operating expenses: Selling, general and administrative 9,253 9,513 18,317 18,776 Research and development 4,420 3,761 8,765 7,625 Acquisition amortization   249     -     498     -     13,922     13,274     27,580     26,401   Operating income (loss): 605 (1,013 ) (64 ) (2,127 ) Other (expense) income, net (10 ) 406 (239 ) 328 Interest expense   (85 )   (25 )   (171 )   (42 ) Income (loss) before (provision for) benefit from income taxes 510 (632 ) (474 ) (1,841 ) (Provision for) benefit from income taxes   (409 )   113     190     333   Net income (loss) $ 101   $ (519 ) $ (284 ) $ (1,508 )   Earnings (loss) per Share: Basic $ 0.01 $ (0.03 ) $ (0.02 ) $ (0.10 ) Diluted $ 0.01 $ (0.03 ) $ (0.02 ) $ (0.10 )   Weighted average shares outstanding Basic   15,584     15,612     15,541     15,473   Diluted   15,671     15,612     15,541     15,473      

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

 

  For the three months ended June 30, 2015   For the three months ended June 30, 2014

Reportedbasis (GAAP)

 

Adjustments

 

Comparablebasis (Non-GAAP)

Reported basis(GAAP)

 

Adjustments

 

Comparablebasis (Non-GAAP)

  Net revenues $ 63,292 - 63,292 $ 57,402 - 57,402 Costs of sales   48,765     85     48,680     45,141     -     45,141   Gross Margin 14,527 85 14,612 12,261 - 12,261   Operating Expenses Selling, general and administrative 9,253 346 8,907 9,513 278 9,235 Research and development 4,420 13 4,407 3,761 - 3,761 Acquisition amortization   249     249     -     -       -   Total operating expenses 13,922 608 13,314 13,274 278 12,996 Operating income (loss) 605 693 1,298 (1,013 ) 278 (735 ) Other (expense) income, net (10 ) - (10 ) 406 - 406 Interest expense   (85 )   25     (60 )   (25 )   -     (25 ) Income (loss) before (provision for) benefit from income taxes 510 718 1,228 (632 ) 278 (354 ) (Provision for) benefit from income taxes   (409 )   (266 )   (675 )   113     (95 )   18   Net income (loss) $ 101   $ 452   $ 553   $ (519 ) $ 183   $ (336 ) Earnings (loss) per diluted share $ 0.01   $ 0.04   $ (0.03 ) $ (0.02 )  

The Company reports its financial results in accordance with GAAP, which refers financial information presented in accordance with generally accepted accounting principles in the United States. However, non-GAAP adjusted financial measures, as defined in the reconciliation table above, are provided herein because management uses such measures in evaluating the results of the operations of the Company and believes this information provides investors better insight into underlying business trends and performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.

During the second quarter of 2015, the Company recorded severance and other related charges of $416,000, of which $85,000 is included in cost of sales, $13,000 is included in research and development and $318,000 is included in selling, general and administrative. Also included within selling, general and administrative is equity based compensation charges of $28,000. Lastly, related to the acquisition of Brink, the Company recognized amortization of acquired intangible assets of $249,000 and accreted interest of $25,000. During the second quarter of 2014, the Company recorded a charge of $278,000 for equity based compensation expense. The aforementioned charges, along with an associated adjustment to the Company’s provision for income taxes have been excluded in the Company’s non-GAAP measures because they are considered non-recurring in nature and/or are quantitatively and qualitatively different from the Company’s core operations during any particular period.

 

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

    For the six months ended June 30, 2015   For the six months ended June 30, 2014

Reportedbasis (GAAP)

 

Adjustments

 

Comparablebasis (Non-GAAP)

Reported basis(GAAP)

 

Adjustments

 

Comparablebasis (Non-GAAP)

  Net revenues $ 122,916 - $ 122,916 $ 113,943 - $ 113,943 Costs of sales   95,400     151     95,249     89,669     -     89,669   Gross Margin 27,516 151 27,667 24,274 - 24,274   Operating Expenses

Selling, general and administrative

18,317 706 17,611 18,776 802 17,974 Research and development 8,765 13 8,752 7,625 7,625 Acquisition amortization   498     498     -     -       -   Total operating expenses 27,580 1,217 26,363 26,401 802 25,599 Operating income (loss) (64 ) 1,368 1,304 (2,127 ) 802 (1,325 ) Other (expense) income, net (239 ) - (239 ) 328 - 328 Interest expense   (171 )   51     (120 )   (42 )   -     (42 ) Income (loss) before (provision for) benefit from income taxes (474 ) 1,419 945 (1,841 ) 802 (1,039 ) (Provision for) benefit from income taxes   190     (525 )   (335 )   333     (273 )   60   Net income (loss) $ (284 ) $ 894   $ 610   $ (1,508 ) $ 529   $ (979 ) Earnings (loss) per diluted share $ (0.02 ) $ 0.04   $ (0.10 ) $ (0.06 )  

During the six months ended June 30, 2015, the Company recorded severance and other related charges of $597,000, of which $151,000 is included in cost of sales, $13,000 is included in research and development and $433,000 is included in selling, general and administrative. Also included within selling, general and administrative is equity based compensation charges of $273,000. Lastly, related to the acquisition of Brink, the Company recognized amortization of acquired intangible assets of $498,000 and accreted interest of $51,000. During the six months ended June 30, 2014, the Company recorded a charge of $802,000 for equity based compensation expense. The aforementioned charges, along with an associated adjustment to the Company’s provision for income taxes have been excluded in the Company’s non-GAAP measures because they are considered non-recurring in nature and/or are quantitatively and qualitatively different from the Company’s core operations during any particular period.

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PAR Technology CorporationChristopher R. Byrnes, 315-738-0600 ext. 6226cbyrnes@partech.comwww.partech.com